Max New York Life reports PAT of 283 crores

Max New York Life Insurance has reported an impressive set of numbers for FY10-11. Profit after tax has increased to Rs 283 crores from a low Rs 24 crores in the last fiscal. This growth is especially impressive given the new ULIP regulations that came into force from 1st Sep, 2010. However it would be interesting to see if they can carry forward with the same momentum in profits in the current year, given the new tighter regulations.

Max New York Life recorded a total premium collection of Rs 5800 crores. New business premium was Rs 2050 crores while renewal premium was Rs 3750 crores. The total assets under management of the company is Rs 13800 crores.

Max has mostly traditional ( non ULIP products) under their portfolio which is why they have been affected less by the new regulations. Also the fact that they have the Bancassurance relationship with Axis Bank well established will provide them additional fuel for their growth.

Axis Bank obtains regulatory approval for Max New York Life stake

Axis Bank, which entered into a Bancassurance arrangement with Max New York Life last year, has received approvals from RBI and IRDA to acquire 4% of Max New York Life at Rs 72 crores. The stake has been acquired by Axis Bank at par and is quite obviously at a discount to Max New York Life's market value. Axis would have bargained to acquire this stake in lieu of entering the distribution agreement with Max New York Life. Previously, Axis Bank had a Bancassurance agreement with MetLife, and accounted for more than 50% of MetLife's total business.

Acquiring stake of the insurer by the bank seems to be a new trend in the Bancassurance space. As the distribution reach provided by banks becomes more crucial for insurers desperate for market share, banks will demand a bigger pound of flesh and ask for more significant stake in the insurer. PNB, one of the largest banks in India, is in the final stages of selecting its Bnacassurance partner for life insurance. Bharti Axa Life, MetLife and Aviva are in the fray. It would be interesting to see how much stake of the insurance company PNB demands.

Max New York Life on Stable Ground

Max New York Life, one of the leading private life insurance companies, expects to turn profitable in this financial year. The company which would have a total premium collection of approximately 5000 crores in this current fiscal has been relatively less affected by the new ULIP regulations as they have focussed on traditional products.  86% of their sales come from traditional products.  Max New York Life also has a high renewal premium to new premium ratio of about 2:1, whereas the overall industry ratio is almost 1.2:1. This is because they have a higher persistency/renewal ratio, and also because they have a lower component of single premium sales in their product mix. Max also has a strong distribution arrangement going with Axis Bank, wherein Axis Bank has picked up a stake in Max and offers Max's life insurance products to its customer base.