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Why Max Life CEO Prashant Tripathy is not worried about market's focus on LIC

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Why Max Life CEO Prashant Tripathy is not worried about market's focus on LIC

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Max Life Insurance has a market share of 10 percent among private players and the company hopes to ramp it up going ahead.

Max Life Insurance MD and CEO Prashant Tripathy on Wednesday said that the focus on its peer Life Insurance Corporation (LIC) that made its market debut on Tuesday will not impact the company as there is a huge demand for non-par or non-participating products.

A non-participating insurance plan does not offer any dividend payouts, meaning the policyholder does not participate in the profits made by the insurer. While a par or participating product allows the policyholder to participate in the profits.
LIC has traditionally sold more of par products but has recently hinted at its focus on growing in non-par business. For Max Life, the non-participating savings products have been doing well among the overall traditional plans.
During the same quarter last year, Max Life's overall traditional plans, including par and non-par and protection products, were at 65 percent of the total portfolio with the remaining 35 percent as Unit Linked Insurance Plans.
"As far as non-par product designs are concerned, there is huge demand in the market and with the stock market not performing, I think that line of business will do very well," said Tripathy in an interview with CNBC-TV18.
Max Life Insurance has a market share of 10 percent among private players and the company hopes to ramp it up going ahead, said Tripathy, adding that the guidance for value of new business (VNB) margin is near 26 percent for the current financial year.
LIC’s VNB margin stands at 9.9 percent, much lower than the private peers, however, the company told CNBC-TV18 that it will take lesser time than private players to reach 20 percent VNB margin levels post listing.
CompanyVNB Margin (FY22)
HDFC Life27.4%
ICICI Pru Life28%
SBI Life26%
Max Life27.4%
Max Life expects Axis Bank to increase its stake in the company by 7 percent over the next few quarters as part of restructuring within its parent firm Max Financial Services.
Last year, Axis Bank became co-promoter of Max Life Insurance with an acquisition of 12.99 percent stake collectively by the Axis Entities in the company.
"Over the next four to six quarters we will be applying for Axis Bank to be ramping up their share from 13 percent to close to 20 percent. It is a part of some structure (restructuring) that is going to happen," said Tripathy.
"On Axis Bank counter, our share last year was about 75 percent and we hope that we will be able to maintain that share," he added.
LIC opened a percent higher today, a day after its weak listing and was trading 0.57 percent higher at Rs 880 per share around 11 am on the BSE. Meanwhile, Max Financial Services was trading 0.73 percent higher at Rs 744 per share.
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