'Our aim is to gain market share, grow faster than industry': Prashant Tripathy, MD and CEO of Max Life Insurance

In retail sales, Max Life Insurance currently holds 9.4% market share of the private life insurance industry and upwards of 6% of the total industry. Prashant Tripathy, 53, MD and CEO of Max Life Insurance, says a delta of 5-6% above the industry will help the company gain further market share. In an interview with Business Today, Tripathy breaks down the FY24 numbers and talks about the growth drivers. Edited excerpts:

How has FY24 been for your company?

FY24 was a very successful year. On an adjusted retail sales basis, we grew at more than three times the rate of the overall industry and double the rate of the private industry.

Our policies grew by 20%. We grew 2.2 times faster than the private industry in terms of the number of policies. Overall, from a sales perspective, it was a very good year. 

The value of new business (VNB) was positive, but as part of our chosen strategy, we indicated that this year we would focus more on capturing market share. Our market share in the private space has increased by 61 basis points.

Why did the VNB increase by just 1%?

The primary reason is that last year (FY23) had been exceptional. We typically have a margin between 26% and 27%, and it came back to that range this year. This year, our margin decreased and sales increased, affecting VNB, which is the product of the two. But next year we aim to be consistent with our growth in sales. The previous year’s unusually-high margin of 31% was not sustainable, as it included significant non-par sales. However, our margins improved every quarter, finishing the last quarter with a 28.6% margin. 

What is your strategy for FY25? 

Our strategy is straightforward— to gain market share and grow faster than the industry. To achieve this, our focus is on a few key areas.  

First, we plan to continue to invest in our proprietary channels. Second, we aim to achieve expedited growth in under-penetrated sectors like health and annuities. Then, we plan to continue to grow and expand our partnerships. 

Fourth, we are heavily investing in technology, with a focus on AI and cloud infrastructure. We are also developing a super app for our sellers and a customer app to enhance interaction and efficiency.

Which product gives you the most margins?

Typically, margins are higher in protection, non-participating savings [policies], and annuities. The participating business has middle-range margins, while the lowest margins are typically in ULIPs. Depending on customer needs, we aim for a balanced product mix.

Why has the industry started focussing on ULIPs?

You have to see it in context. I’ve been in the industry for 17 years, and during times when markets rise quickly, you typically see a higher mix of ULIPs. It’s just a matter of adjusting to market conditions.

What product mix do you aim to have in FY25?

We are close to our ideal mix. Typically, a 60:40 mix (of traditional and ULIP) is good for us, but within that, we aim for 15-20% par, close to 35% non-par, around 15% for annuities and protection combined, and the balance through ULIPs. Currently, we have about 10% from protection. 

How do you see synergies with Axis Bank increasing with the higher stake?

The synergies are substantial. Our Chairman, Rajiv Anand, is the Deputy MD of Axis Bank, and we have four top team members from Axis Bank on our board. It is our largest distributor, contributing 52% to our sales. This deep collaboration helps us strategically in growth, product mix, and new channels. 

Do you see a risk in having 52% of your business coming from one partner?

It used to be higher. We are intentionally reducing this dependence by signing up with more partners. This strategic move reduces risk and ensures a more balanced distribution. 

Max Life is listed as Max Financial Services. Do you aim to list it directly?

Max Financial Services is the holding company of Max Life, with no operating business/assets of its own, except its shareholding in Max Life. To simplify our structure, we aim to be directly listed and are working towards merging Max Financial Services with Max Life, subject to regulatory approvals. 

What are your views on Irdai’s stance on surrender charges?

The industry aligns with Irdai’s efforts to benefit customers. We believe the decision will create a win-win for both customers and the industry.

What are your views on composite licences?

Composite licences, which allow life insurers to offer health insurance, can significantly expand our reach and opportunities.This integration can leverage our vast distribution network to improve health insurance penetration. Enabling this integration can significantly expand our reach and sales opportunities. This time it’s not in the hands of Irdai. This will be by government as law.  
          
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