Max Financial Services (NSE:MFSL) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the Max Financial Services Limited Q2 and H1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishant Kumar, Chief Financial Officer of Max Financial Services Limited for opening remarks. Thank you and over to you sir. Good morning, everyone, and thank you for joining Max Financial's earnings call for the quarter ended 09/30/2026.

0:49 Our quarter two FY results have been released and are available on our website as well as on the stock exchanges. Joining me today are Mr. Sumit Madan, Managing Director and CEO and Mr. Amit Singh, Chief Financial Officer of Max Financial Services With that, let me hand over the call to Sumit to take you through our performance and key developments during the second quarter of FY 'twenty seven. Thank you, Nishanth, and good morning, everyone. The second quarter of FY 'twenty seven was indeed marked by a heightened global uncertainty, a changing interest rate environment and significant regulatory developments for the insurance industry. The proposed changes to commission structure and the expense of management framework have initiated important discussions across the sector and reinforced the industry's continued evolution towards greater transparency, customer centricity and operating efficiency.

1:39 We support the broader objectives of these reforms, including simplified distribution economics, clearer alignment between commissions and expenses, stronger incentives for renewal and persistency and enhanced protection for policyholders. At the same time, the proposed limits and commission caps represent a meaningful reset of industry business models, particularly coming on the back of several major regulatory changes over recent years. At AccessMax Live, we have consistently focused on building a diversified and a resilient franchise with balanced growth across channels, products and customer segments. This has enabled us to navigate periods of change effectively while maintaining the business momentum.

2:24 We are confident as with the previous industry transitions, we will adapt successfully to these reforms and emerge much stronger. With that context, let me take you through the key highlights of our performance across our strategic priorities during the quarter. First, like we always say, sustainable and predictable growth. Access Max Life continued to deliver broad based growth across both proprietary and partnership channels during the first half of FY 'twenty seven. Our individual adjusted first year premium grew by 12% in H1 FY 'twenty seven and nine percent in Q2 FY 'twenty seven, enabling us to maintain our private market share at 10.1. More importantly, our performance continues to demonstrate consistency through various market cycles with a three year CAGR of 19% in Q2 FY 'twenty seven, significantly ahead of the industry growth rate of around 11%.

3:19 Total APE grew by 11% in H1 FY 'twenty seven and 8% in Q2 FY 'twenty seven. Our Proprietary channels delivered 9% growth in Q2 FY 'twenty seven on a high base, underpinned by a robust three year CAGR of 25%. Within the Proprietary channel, our e com business continued to strengthen its leadership position across both direct and aggregator platforms, registering a 29% growth during this quarter. Partnership channels grew by 11% in HY FY 'twenty seven and eight percent in Q2 FY 'twenty seven. Within this, the Access Bank channel recorded a 4% growth, while our broader retail partnership ecosystem continued to gain scale and momentum, delivering a 19% growth during the quarter.

4:06 This highlights the increasing contribution of our diversified partner network to our overall business growth. We also witnessed strong traction in the group credit life with the business growing at 41% in Q2 FY 'twenty seven. Notably, partnerships onboarded over the last three years have now started to contribute significantly and came in at more than 35% of the group credit life APE, reflecting the success of our efforts to broaden and diversify our growth engines. During the quarter, we continued expanding our addressable market. Our Give City proposition gained momentum, enabling seamless digital acquisition of NRI customers, while our distribution ecosystem expanded with five new partnerships. These initiatives further enhance the resilience of our franchise and position us very well to capture the emerging opportunities while reducing the dependence on any one single channel.

5:01 Second aspect that we've always focused on is product innovation, driving margin expansion. Product innovation continues to be a key strategic lever for us, enabling both customer relevance and profitable growth. During the second quarter, our retail product mix remained well diversified with participating and nonparticipating savings products contributing 15% each of the retail APE. Protection and Health, 14% Annuity 19% and ULEP at 37%. This balanced mix reflects the strength of our multiproduct strategy and reduces dependence on any one single product category. Retirement, like we mentioned earlier as well, continues to be one of our most exciting growth opportunities. In Q2, we launched smart retirement income with sustained earnings plan, popularly now called Smart Rise, which combines flexible lifelong income with a nifty INR50 ring variable annuity option, offering customers the potential to participate in the long term market growth. The product has been well received and already contributes around 8% of our total APE.

6:07 Driven by strong customer demand and the success of Smart Drives, our annuity business grew by 130% during Q2 FY 'twenty seven. We also continue to strengthen our protection franchise. Pure retail protection grew by 31%, supported by healthy customer demand, while wider growth remained broadly stable amid some softer ULEP market sentiment. During the quarter, we also relaunched the Smart Term Plan Plus with eight flexible protection variants, life cover up to age 100 and enhanced women centric benefits, including maternity cover and lifetime plus benefits. We maintained our position amongst the industry leaders in protection and remained ranked three in individual sum assured with individual sum assured growing at 18% in H1 FY 'twenty seven.

6:56 In addition, we expanded our reach across emerging customer segments. Our USD denominated smart gift proposition continues to gain strong traction amongst NRI customers. With Gift City business now scaling up rapidly and contributing more than 5% of the ULIP APE. We also launched innovative group solutions in the credit life segment, further strengthening our product suite. The continued momentum in our protection and retirement business has improved both product mix and profitability. As a result, HY FY 'twenty seven, our VNB grew 21% to INR $11.80 crores, while VNB margins expanded by two ten basis points to now 25.4%. These results reflect the strength of our product strategy and our continued focus on building a high quality franchise capable of delivering sustainable long term value creation.

7:50 The third aspect, which we always focus with great pride, is around having a customer centric approach. At Axis Max Life, customer trust remains the cornerstone of our franchise and continues to strengthen across multiple dimensions. During the year, we achieved the distinction of being ranked number one life insurer in customer experience by Hansa Research, improving from an earlier position and reinforcing our commitment to customer obsession. Our Net Promoter Score improved further to 62 from 60 last year, while both TouchPoint and relationship NPS continues to strengthen. We witnessed significant improvement in customer service, policy issuance and purchase journeys through a combination of process simplification, automation and digital interventions.

8:38 Claims remain one of the most important moments of growth for an insurer. Our InstaClaim proposition continues to deliver industry leading outcomes with sixty three percent of the eligible claims settled within one day and fifty six percent actually settled within three hours itself. These outcomes are supported by ongoing investments in automation, analytics and a very customer centric claims process. While the thirteen month persistency is at 83% versus 85% last year, we continue to be ranked amongst the top players on NOP persistency across cohorts. Importantly, long term persistency, including thirty seventh month, forty ninth month and sixty first month, reached their highest ever levels with a significant improvement year on year, clearly reflecting improving business quality and a stronger customer engagement over time.

9:31 Fourth aspect is around digital, digitization for operational efficiency. Digital data and AI continue to transform AccessMaxLife into a more intelligent, scalable and a customer centric organization. Over the last few quarters, we have moved beyond experimentation and are increasingly seeing measurable business outcomes coming from AI. Today, we have more than 47 AI solution tracks and multiple enterprise wide AI platforms operating across recruitment, sales, underwriting, servicing and customer engagement. In distribution, our sales ecosystem has become increasingly intelligence driven. AI based recruitment generated over 60,000 leads, while our sales Copilot supported more than 82,000 sales interactions during the year.

10:17 AI powered recommendation engines, personalized nudges and performance tools are helping improve productivity and sales effectiveness across channels. In customer acquisition and cross sell, our AI driven propensity and PASA engine have generated substantial business impact, while our Gift City digital onboarding platform has enabled rapid scaling of our NRI proposition with a fully digital customer journey now. In underwriting and risk management, AI enabled models delivered nearly INR 1,000 crores of risk avoidance through enhanced fraud and mortality detection capabilities. Financial frictionless underwriting now supports half of our protection business, improving both customer experience and operational efficiency.

11:02 On the customer side, our app ecosystem continues to scale strongly with over 12 lakh installs, while AI enabled servicing capabilities, CS Copilot, automated email bots and voice AI platforms are improving the responsiveness, reducing turnaround times and enhancing an overall customer satisfaction. These investments are increasingly translating into tangible business outcomes through higher productivity, better customer experience, improved risk management and stronger growth. In summary, I would just like to say our growth continues to be supported by a diversified distribution franchise, strong momentum in Protection and Retirement segment, industry leading digital capabilities and a continued focus on customer trust or Barossa, as we say. At the same time, our profitability metrics demonstrated the quality of the business we are building.

11:57 As the industry adopts to the evolving regulatory framework, we remain very confident in our strategy, execution capabilities and our ability to continue creating sustainable value for all our stakeholders. I now want to hand over to Amrit, who will provide an update on our financial performance. Thank you, Sumit, and good morning, everyone. Just some housekeeping update on the key financial metrics. MFSL revenue, excluding investment income, now stands at INR 17,484 crores, which has also grown by 16%. The consolidated profit after tax at MFSL is now $2.19 crore, which is up 137 percent. The gross written premium experienced a healthy growth of 17% and is INR 18,066 crore for the first half, where the renewal business has grown at 18% to INR 11,247 crores.

12:50 Individual new business, some assured, an important metric for us, grew 18% year on year, and we are now on individual side, INR 2.55 lakh crore of some assured, rank three in the private industry, which underscore the continued focus on expanding the protection business and sum assured growth. The growth may appear lower than protection business, primarily due to you would have seen in the mix that mix has shifted towards annuities and annuities do not have some assurance built into them. And that's the reason why the 18% growth is smaller than the Protection business growth. Embedded value of the company at end of September twenty twenty six stands at INR 31,437 crores, a growth of 17% year on year. Analyzed operating ROEV has improved by 100 bps to 17.3% in the first half.

13:41 This includes around a marginal INR 5 crores positive on the operating variance side. The nonoperating variance stands negative at INR $2.16 crores, largely due to the movements in the interest rates, and this is transitory in nature. We have continued to maintain sharp focus on operational efficiency. Policyholder operating expenses as a percentage of JWP improved by 174 basis points year on year to 13.7%, driven by focused productivity enhancement initiatives. If you adjust for GST, which is in the run rate in this particular half, the policy holder OpEx ratio has actually improved by 300 basis points to 11.7% in first half FY 'twenty seven from 14.6% in first half FY 'twenty six last year. Overall, policyholder expense have grown only by 3% during the first half. And total expenses, including commission, that has grown only by 9%.

14:33 AUM now stands at INR 2.06 lakh crores, a growth of 11% year on year. As Sumit mentioned, V and B margins expanded in the first half from 23.3% last year to 25.4% in the current year, a growth of 21%. And for the quarter, quarter two, the VNB actually stood at 27%, and this is despite the GST impact. Overall, profitability outcomes gives us the confidence that we will be able to maintain our overall momentum for the future. And with that, I'll ask the moderator to open the floor for questions. Thank you, sir. We will now begin with the question and answer session. If you wish to withdraw yourself from the question queue, you may press star and two.

15:29 Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shreya Shivani with Nomura. Please go ahead. Yeah. Thank you for the opportunity and congratulations on a good quarter. I have two questions. My first question is on while the first half performance on the VNB growth has been strong. If you can help us understand now that protection will have a high base, I mean, we already sort of softened on protection 2Q itself, but protection will have a high base in second half, non par will be declining.

16:20 What kind of AP growth is likely for us in the second half? Also, what kind of V and V margins are feasible because the kind of 1H at 25 itself is ahead of what you've historically done. So some color around how can second half pan out for us in terms of growth, in terms of margins would be useful. My second question is on the EOM caps that have been suggested. So any color that you can give around on how much will we be able to achieve by just the commissions reducing? What other efforts will we have to make to reach 12.5% AUM over the next five years? What are the suggestions that we are giving to the regulator given we are a retail only life insurer? And any color on that would be useful. Thank you.

17:12 Yes. So thanks, Sheth. I think three questions. The first one on AB growth, I think the second half presents kinder base. So we are more confident that we should see an acceleration in the second half. And also, there will be an opportunity which a transition always brings about. So we will capitalize it to the fullest potential. So we are more confident that AP growth should look better in the second half than the first half. On margins, I think what you're missing out in our margin trajectory is that we do get an advantage of operating leverage. We do report our margin on as is operating expense basis. And hence, every quarter, as the sales volumes kind of pick up, the margin expansion also improves. So even if some moderation, which may happen because of very high base of prediction, The overall margin profile is the confidence is more positive, and we should continue on this expansion journey that we have experienced so far.

18:16 Coming to your questions on the consultation paper. Look, this is a consultation paper, and we have provided our views on the same to the regulator as well. And there will be an active engagement. But at a macro level, the journey for us, which is we are around 25% on expenses management to GWP ratio, the 15% journey, I think with the mix of the commissions getting realigned towards renewal than first year as per what has been indicated and some cost actions over the next two point five years to be taken, we're confident that we'll meet it.

19:07 Relatively, I think if you really ask us that how much is that OpEx to be taken out, it's maybe a 7% kind of a number that we'll have to optimize, it's 3.5% optimization over two year periods, which is not doable. You would have seen how we have started on the journey and some of the tech investments, etcetera, and the reset of the investment will help us do so. So we remain confident that we will map to the guidance on that particular element. But having said, I think a unified single cap is also has its, I'd say, pluses and minus, and we have recommended to the regulator to look at holistically among many other things that we have recommended.

19:56 Yes. I think Amit has largely covered it. I have to say we've had some very constructive meeting with the regulator. We, a collective unit also, through various representations, have met DFS. If you look at the long term impact of some of these changes, these changes are in the right direction. I think the challenge always is to navigate them in the short term. I think Amrit rightfully articulated that with the help of some commission and GST adjustment, we should be able to gain to the extent of around 5% to 7%. Then of course, you always have the business and efficiency measures, which we have demonstrated in the last few months and quarters as well. That should also give us another two to 3%. So I think the journey from a 25% to fifteen percent first and then to 12.5%. Frankly, when you do the internal calculations, we are quite confident around the same. So I don't see much of a stress around it if that's the way the shape and form the guideline finally comes. In our specific conversation with the IRDF since you asked that question, think some of the specific suggestions we made are also around group credit life. Because GCL is around pure protection, it covers life, which we are unable to cover through detailed term.

20:57 So that's I think that's an important product where certain suggestions across the industry have been made. Amrit spoke about the transition period. So there have been some specific conversations and suggestions to the regulator around the transition period as well. There is obviously also a softer point around exclusion of GST from EOM computation. It's a bit of a gray area because today also GST is excluded. And the regulator has taken all the suggestions in a very constructive manner. And I'm quite hopeful and optimistic that the suggestion made by the industry should be a part of as and when the final draft paper comes out. Right. Thank you. That was useful. Just to follow-up on the VNB margin portion on the as is expenses that you mentioned. So as the growth momentum picks up for an... Us in the second half, expenses pick up, there will be some moderation on the margin. That's the correct way to think about it. Right?

21:50 No. Not really. I mean, I think the point that I was trying to highlight to you is that our quarter three, quarter four, structurally, our margins improve. Yeah. Yeah. Volume builds up. So you will see an expansion in margins, and it should only look better from where we are at the moment. All right. Okay. Okay. Understood. Okay. That is useful. Thank you and all the best. Thank you. The next question comes from the line of Swarnath Pukherjee with three sixty one Capital. Please go ahead. Hi, sir. Good morning. Thank you for the opportunity, and congrats on a great set of numbers. Three questions from my side. First, I wanted to continue on the discussion on VNB margin. So I mean, first of all, if you could give us some color on the VNB margin walk rate, what proportion has come from product mix change?

22:47 And given that we see that your cost structure has also improved, is there any operating leverage playing out there? And any kind of like variances that have played out, if you could highlight, given the overall asset class characteristics have been also fairly volatile in this quarter? So that would be my first question. And sir, also wanted to understand that given that the whole your product mix is improving, your cost structure is improving, and you are saying that your margins are likely to be better in second half because of how operating leverage plays out. Would we be then expecting an upgrade on the margin guidance that you normally provide because we are already 25% plus now in the first half? So that is the first one. Second is our two key channels, Bank and mean, Access Bank and Agency, these two has been subdued this quarter.

23:41 So just wanted to understand how should we think about the glide path as we move into the second half? And what are the challenges that are there right now which is impacting? So is it only ULEP as a category that's underperforming because of this lack of slower growth is there or anything else to read into? Thirdly, I just I mean, I think overall at the industry level also, are seeing a lot of growth reported by players from the annuity side. You have also launched a variable annuity product. However, unlike a few other players, your non par growth has been lower. So it has is it a function of a high base? Or is the customer cohort fairly similar and annuity cannibalizing non par?

24:26 If you could give some color on that. Yes, that's it from my side, sir. Lots of questions there. Thanks, Varnabh. On V and V margins, think largely, it is happening because of mix and also the inherent margins improving within the products. I will the attribution to operating leverage is far lower. It's largely to the mix is how I'll kind of put it across. You do recall that in the base, there is GST. So some bit of this mix plus margin improving and the negative drag due to GST has got offset, and there is a structural improvement, which has kind of come through, which will now you should just see in a kind of base from previous year period as well as we entered into the second half. From a guidance perspective, we have always guided that we would like to keep the margins between a 25%, 26% kind of a range trajectory. I think as the year is progressing, possibly now, confidence is more towards closer towards 26% than anything else. So we will like to still hold on to that range. But yes, maybe as for the shorter period of time in the second half or for the full year, FY 'twenty seven, closer to 'twenty six is the way we will put it.

25:40 On the growth? Yes. On Access Bank and Agency, since you specifically asked that question, I think important to look at the performance over the last almost thirty, thirty six months now in both the channels. Access Bank, specifically, as far as H1 is concerned, our AP grew by 8% on an year on year basis. And if you look at a three year CAGR basis, H1, it actually grew by 10%. So from a consistency and resilience of the partnership, I think things are in order. This quarter's growth was moderated largely because of certain market volatility impacted on the customer demand for ULEFS. And I think also credit to a delayed launch of our new protection product called STPP. There's a newer version which was launched slightly delayed compared to the time lines we had in mind. I think this had a bit of an impact.

26:25 Over time, I think and we've referenced this in the previous investor calls also. Over time, I think our ability to be able to now make significant investments and numbers coming out of channels other than branch banking are also playing a critical role. So in Access Bank, some of the channels like telesales, some of the channels like Corporate Banking, Small Business Banking, Bharat Banking, the D2C business and the corporate salary. And Access Bank has a very in terms of the customer base, I think it's a very good profile of customer base that Access Bank has. So I think now that business has also started to scale up. And from that perspective, Access will continue to keep on becoming a significant contributor. In fact, the contribution of these emerging channels to our Access Bank sales has now grown from 12% in Q2 FY twenty twenty six to now 30% in H1 FY twenty twenty seven. So I think some of these channels have also started to now punch around their weight. And this has also broadened the channel growth base amongst making it more diversified.

27:26 What we've also done is we've launched a full scale transformation program, which we call Parivartan Plus. It's a program similar to the one we ran in agency around two years back, and we saw some significant success around it. It's a transformation project that we have taken along with Access Bank to help us gain more efficiency and also just to fasten the pace around some of the other growth engines of the partnership also. So I think I am looking at Axis Bank as amongst the strongest channels for us. Growth should not really be an issue, slightly subdued like we mentioned because of a delayed launch and a bit of an overhang of the equity market as well. On your specific question around agency, I think, again, last year's agency had a higher non par mix, which was following the launch of SmartVibe. Now during H1 or FY 'twenty seven, the product mix has largely normalized with protection share improving due to GST tailwinds and while the non par mix has normalized. Now what has happened is that this has resulted in a lower average case size in case of an agency channel, which creates an overall kind of an optical impact on the reported growth. What is important is that the fundamentals of the agency remain very, very strong. There is an improvement as far as agent productivity is concerned, where we launched a specific program, which actually brought back 12,000 plus dormant agents back to active selling. The recruitment has strengthened.

28:45 While in case of H1, we grew only by 4% versus let's say a growth of 8% year on year in August, September, The pickup has really happened now and our broader product range is also gaining traction in agency. Annuity grew by around 50%, protection grew by 27%. So I think some of these give us a lot of confidence as far both agency and the access business is concerned and things are moving on the right track. I'll not be too worried about performance across one or two months. And lastly, on the annuity piece, so Svanabh, some part of your assessment is possibly true because nonparticipating design chassis also had income stream products, which actually would mimic providing assured income to a retiree or a near retiree.

29:30 So annuity definitely has possibly cannibalized some bit of it, but I think there is distinctiveness. We do have a high base of nonparticipating over multiple years, so some bit of that moderation resetting is happening. But nonparticipating products do provide fixed endowments elements as well with a guaranteed component, which is for a different need than an income need. The income need can be serviced with an annuity design. And now with the variable annuity, I think ability to participate in for the customer to participate even on the equity upside is something that has got added as a feature. So I will tend to agree, but yes. Understood. Understood. This is very clear. All the best for second half. Thank you.

30:16 Thank you. You. The next question comes from the line of Prajeet with Mutilaruswal Financial Services. Please go ahead. Yes. Hi. Thank you for the opportunity and congrats on a good set of numbers. Firstly, could you explain as to you mentioned that product mix and inherent margins have played an important role in the VNB margin expansion in this quarter. How much of that would be coming in from the non par benefit that you would have got on the because the interest rate curve movement? And have you done a reset after that so that kind of inherent margins kind of go down in the second half? That would be my question number one. Question number two would be on the protection side of the business.

31:07 If you could share as to, you know, what is the channel mix on the protection... The audio on retail protection, what is the channel mix? And in this... In in a scenario of the consultation paper, now that the, commissions will not may not play a meaningful role in terms of distinguishing, pricing will become a very competitive element in terms of getting market share within the channels. So how do you play that? And lastly, again, from a consolidation perspective, do you see Access Bank getting into a more closer architecture? Or how do you think about your wallet share in the Access Bank channel going ahead, especially considering the consolidation paper? Those were my three questions. Thanks. I'll take the last one, you take it.

32:01 Yes. So Praj, thanks for your questions. I think on your first question that how much is yield curve and how much will that go away, etcetera, I think it's a little bit of a theoretical question. Whenever yield move, even in the past, you keep repricing up and down depending upon the competitive nature. So at this point in time, our products are competitive in the environment, and we're getting the margins out of those products. So the products, I'll say, have got price to a reality. Now attributing it to yield curve versus mix, I think it's a little I think it's just kind of extra guessing out of some of these elements here. The way you should see is that in the environment, we have priced, our products are competitive.

32:47 And in that environment, we are actually generating good healthy margins. Now if yield curves move up and down whichever direction, there will be action which all participants will take in the market. And consequently, the margins will be protected or enhanced or depending upon how the competitive elements kind of plays out. On your question on protection channel mix, in the Investor Day, we do put out a page where we show the proprietary channel and the partnership channel protection mix. And you would have noticed that our proprietary channel protection mix has always higher. So what we are able to do online, what we are able to do in our agency team and whatever we are able to do in our direct selling force team, the protection component is always higher in those particular channels. I think these were... And then there was a question on... So I was on... Just on protection piece, I had asked about, you know, now that the consolidation paper commission angle goes away, how do you compete it?

33:45 So I mean, today also, protection is not just competing on commercials or pricing. There is a lot which kind of goes into it. There is a brand, there's a brand promise, there is a narration of how you communicate, how you incentivize, how you direct the teams, etcetera. And hence, it is unfair to say that in tomorrow's world, that advantage will go away and it will only become a pricing game. So I will not agree to it because very frankly, there is an equilibrium which exists today also on how much the payout, etcetera, happens. But having said, I think you should notice that in the consultation paper, this is one category where the regulators understood the difficulty levels and have actually provided for higher FICs and RYCs.

34:40 And protection incidentally also demonstrate one of the most superior consistencies among all product categories. And when you see it on the RYC, if you start selling regular pay products for a long duration, and then you try to do an NPV of how much you are paying in today versus tomorrow's era, largely, it is insulated actually. The economic value to the distributor on selling protection will remain fairly insulated even in the new era of protection business. Now just because the first year has kind of come off, will it create significant disincentivization? Maybe not. I think there is an NPV component to it, which will kind of come in. India continues to be severely under some assured time and again in our service also we have seen that.

35:32 Our estimation says that even for a and assuming a target market size of INR $8.09 crores only, the current penetration level is possibly more in the 15% kind of ranges. So there is more and enough opportunity in this category. I think on the last question, Praj, that you asked around Access Bank and Close Architecture, I'll have to say that this is answer I'm trying to articulate is more wearing my shoes and the capacity that I manage. Either for Access Bank or for any of the other banks, I will not be able to answer for them. But largely in the role that I do, I personally feel that the attractiveness of any bank in terms of dealing with too many players will significantly go down in the near future.

36:18 So I think with the way the regulations are now being defined, whether it's any bank, I think in the short and the medium term, you will see them taking a call in terms of dealing with a fewer players. So I think that's something that I would like to qualify with. Now how access or any other banks will behave would be difficult for me to answer at this point of time. As and when they take some of these calls or let's say even otherwise or with the help of Perivertsen Plus also, whichever situation you unfold, we continue to remain very confident in terms of an OA gain share at Axcel Bank. Got that. Thank you so much for those detailed answers. Thanks. Thank you. Thank you. The next question comes from the line of Samad Shaikh with PhillipCapital.

37:07 Please go ahead. Yes. Hi. Good morning, everyone, and thanks for taking my questions. Most of the questions have already sort of addressed. But in terms of cost, if I see the OpEx was broadly flat in Q2, while premium has sort of grown by 15. Employee cost has fallen by 10% Y o Y. Advertising cost also, I think, 34, 35%, while other operating expenses have risen by 23%. So so I I I understand there's some reclassification, but first wanted to understand that there's a cut in the staff and advertising cost. Is it deliberate? Is it ahead of the year end limits?

37:52 And how much of it is sustainable? And just that what cost ratio should we expect for FY 2027? So this is the first question. I'll ask second question after this. Yes. So I think with respect to your observations, you will recall that we have been investing in our distribution franchise for the last couple of years now as we entered new territories and new geographies. Example, entire buildup of retirement business, the entire presence in brokers, corporate agents and smaller banks and many new models. Now it is quite likely and quite expected that as years kind of go by, the productivity starts improving. So you don't need to do the same level of investment that kind of comes through. And hence, productivity gains do come about.

38:49 Even though on the headline number, you are seeing a 3%, 3.54% growth, but the core growth does remain at around 9%, 10% in our OpEx, which we have done to ensure the business momentum is sustained and built upon. With respect to your question of how do we see assets ending, there is this year, in OpEx, even GST is actually added. So from a total expense to ratio, it may still remain in the range of 25% levels, which is where we were last year, despite 22.5% extra GST coming in, which if you remove out from the base, then you can say that there is a reduction. But on an overall number, it will remain steady in the ranges of last year numbers.

39:39 Yes. So you said that the core operating expense will be sort of high teen high single digit, 8% to 10% sort of. Yes. That's right. Okay. And just one question on India. May be a bit early to ask this, but anyway, that is forthcoming. So in terms of which transition approach are you starting to use for the in force book? So I understand that the I'll only come to you on this one, actually. I think it's a little premature for us to start commenting on it. At the requisite time. We have started lot of Like like, we... When the FY twenty seven numbers will also be restated? Or Yes. So whenever we FY '28 numbers are provided, there will be a comparative period of FY '27, which will be provided. And 04/01/2026 will be the transition date.

40:35 Okay. Okay. Thanks. Thanks and all the best. Thank you. Thank you. The next question comes from the line of Nitesh Chien with Investec. Please go ahead. Thanks for the opportunity. The first question is on capital raise plans. What are the capital raise plans from here onwards? Yes. So I think, Nidhi, our capital is solid. You must have noticed we are at 197. We did raise around INR $6.86 crores of debt in the month of September. And looking at 197% and the consumption that we do, we are fairly comfortable with our internal yardsticks that we hold ourselves accountable and responsible from a risk framework perspective.

41:21 Now there are moving parts here. There are moving parts of actually the entire EUM regulations, which does reduce strain and hence the need for capital. There is the entire moving part of IFRS and RBC. So I think as the moment stands, no immediate look out for capital. We seem to be comfortable with the position that we are. Sure. And secondly, on EM cap, so H1 year, GST is 22.5. I think for the full year, it is reasonable to expect that it may be slightly lower than around twenty two percent. And at 22%, if you apply the new commission limits, what would be the AUM at that new commission limits?

42:12 So it does fall down to in the ranges of INR 16.5 crores to INR 17.5 crores kind of level. So INR 17.5 to INR 15 crores over two years, that should be the journey, right, to... That's what I said actually at the one of the questions that was asked, That is not like a significant number. We can navigate and manage that. And on EM again, so for next year onwards, we will start reporting IFRS. Our IGAP numbers will not be reported. Right? So how the EMs will be calculated in that framework? So IGAP will be reported for two years. But, yeah, this question is... I mean, maybe we should seek clarity from the regulator. But the the... Because IGAP will be reported in parallel for two years, so you can effectively compute the numbers for sure.

42:59 But after two years, when the limit is applied, at that point in time, IGAP will not be there. And under IFRS anyway, I think expenses will be much lower than what are there in are in high GAAP. So you can derive some bit of these expenses from the IFRS numbers that get put out. So very frankly, accounting standard has no bearing on UN. If you want, you can derive some of it. But I guess that's a good question that you may see clarity from the regulatory topic. And just last question on the Access Bank. So Access Bank growth this quarter was 4%. Last year, Q2 was also not strong growth. So I think Access Bank in terms of growth has been lagging for some time. It's not just one or two quarter phenomena.

43:48 So do you see acceleration in Axis Bank going forward? Or it will reduce in overall AP mix? No, I think we are quite confident of the growth at Axis Bank. In terms of input parameters, like we said, it's already started to show some very encouraging signs. As part of H2, we are quite confident of a healthy growth coming from Axos Bank. Due to the fact that over under the new EM framework, the incentives to consolidate with one single player increases. So we are actually optimistic that we should see gain there for any potential loss that may happen on the smaller side of GCL and other distribution partners, which are more affected.

44:38 So yes. Sure. Thank you. Thank you, Amit. Thank you. You. The next question comes from the line of Vinod Rajamani with. Please go ahead. Yeah. Thank you for taking my questions. So I have two questions. One, so you... We see nonpart and annuity meeting different needs. But if you take them together, they have grown around 2.5% Y o Y in Q2 and about 3.5% in 1H. So if you think of these as a group pay, non foreign annuity, what kind of growth do you expect for these two in the second half?

45:24 Then some related questions on this is, is there any internal ceiling any internal management ceiling on annuity share of, say, AP or something? Because that is question number one. The second question is, you also said that you expect banks to work with fewer insurers under the new rules. This will definitely help with access. But at the newer bank partners where you've entered or say the fourth or the fifth year, those partnerships, how much of AP do they contribute? That is I had a question on that. And how much of the business from banks comes from where you are not among the top two? And how do you hold those relationships if they kind of consolidate?

46:14 That's question number two. Yes. I think thank you for that, Dheeraud. I'll take the second one first because it's a question being asked across. Before I answer, let me just explain the how our share really works at this point of time. Out of our overall sales, actually, Access Bank contributes almost around 4243% of the sales. Now with the regulatory changes on the annual, if anywhere these changes would be impacted like we articulated, we expect our counter share to only go up. So we don't see any kind of a downside as far as this 42, 43% of our sales is concerned, that's one. When you look at the agency side of the business, agency, which is 21% of our overall sales in addition to 43% of access, this 21% of the sales when you look at it, the new agents and the base advisers and we've gone into every detail possible, the new agent and base advisers largely remain unaffected as the current payouts are already below the proposed limits. Now there may be some top agents that may see some impact in the NPV terms, But again, it is expected to be manageable on a bit of a pool basis and their strategy is around it. So when I look at this 43% plus 21%, so let's say around 64% of the business, I think we will only stand to gain than lose in terms of the new regulation which will come in. If I look at our D2C business, including, let's say or let's break it down. Let's say our D2C business contributes another 6% to 7%.

47:40 Now again, as far the regulations are concerned, what we do through our own app or our website, the D2C business does not get impacted. So 43 plus 21 plus another six to seven makes it 70%. We have another 12% of the business, which comes from this channel called direct sales force. This is the upsell, cross sell engine of the company where our employees sell. And these employees are on a salary, they are on an incentive. So I do not see this 12% of the business also really to be impacted negatively in any way. Gain is obviously possible. So just zooming out, 43.21%, which is sixty four sixty four plus, let's say, another seven coming from e com, which is 7112% coming from DSF, which is 83.

48:25 So we are seeing largely this 83% of the business does not get much impacted. We have another 5% to 6% coming from the S. Bank, where we are number one as far as counter share is concerned. So even if hypothetically, and I can't answer this on behalf of the S. Bank, even if some consolidation has to happen, I personally would feel, bearing my shoes, it should not be anything negative against us. So I think 83%, another five or 6%, we are discussing 89%. So I think from that perspective, almost we can say around 90% of the business, we stand to gain rather than lose if these changes do have to happen. To your specific question, when you look at small banks or some of the other banks we have a partnership with, while we've been aggressive on that, but the reality, we told they contribute around three percent to our overall numbers.

49:13 Brokers, especially the small brokers who with the regulation may impacted, again, contributes to around 2% to 3% of our overall business. GCL is another line where there may be a bit of an impact coming. Again, we'll be impacted only to the extent of 1% as far our overall numbers are concerned. So I think idea is to give you a broad perspective that if the regulations do come in this shape and form, while everyone stands to get impacted in some way or the other, I see the impact rather minimal as far as access to max life insurance is concerned. In fact, I'm actually more hopeful and optimistic that we stand to gain with some of these regulatory changes. Sorry, you were saying something before Amrith's response No, no, no. Just thanks for the very detailed answer. Just one follow-up. So the proportion of business which were in the banks where you're not in the top two, if I heard that correct, that would only amount around 3%. Is that number right? Actually, that's yes. Answer is yes. But even in those banks, there are actually three banks where we have counter share to the extent of number one. So that I mentioned that there are 3% of the business, which are smaller banks, but even in those smaller banks, we are actually number one in three of those banks. So the again, the impact would actually be around 1%, 1.5% or so in that category.

50:34 Okay. Thanks for that very detailed answer. Yes. When I optimistically look at the Excel sheet along with the team and Amrit, I can very safely say that 95% of the business actually does not get impacted. Yes. And I think on your questions around non par and annuity growth, you're looking at just the first half, some bit of base paying out. If you see long term trends added these together, these are also growing healthy 15%, 16% levels. So three year CAGR for these categories combined is healthy. So I think rather than just seeing it in that particular nature, I think you should take a bit of a longer view here, given that overlapping elements of this segment. But more importantly, we do have certain launches planned on annuities again. There's a refresh that we are thinking of in the fourth quarter.

51:23 So hopefully, the momentum should stay steady in this particular category as well. Now ceiling on annuity, I mean, I think the question is coming from risk perspective. The reality of annuity sold in India is that most of it is return of premium kind of designs. So there is not too much of an interest rate risk that you end up taking. The interest rate risk taken on these products is actually much lower. So no hard and fast ceiling that we have. I think just overall idea is to always continue to have a diversified product mix and cater for all rather than just be singularly focused on a single segment. Right. Yes. Thanks so much. Thanks for the detail, Anshul. Thank you.

52:10 The next question comes from the line of Madhu Karlara with JPMorgan. So first, on access bank, see, the growth is being a little weak in 2Q. And even on a soft pace. Are we actually losing counter share? What exactly is happening over there? Second, you've also mentioned that... And and logically, I think banking relationship should consolidate. Have we had any early discussions with Access Bank on this? Any sort of early indication from them as to how they are thinking about this, if you could share that perspective?

52:55 Second question, although our business growth has slowed down, new business strain continues to, be quite high. So even for 2Q, I think new business strain has grown at about 20% year over year. Which product is really causing that? What is really driving that? And last, I'm not sure whether this has been addressed. Protection growth has come off in this quarter. Some sense on what is really happening over there and what would we expect in terms of growth in the second half and maybe sort of a slightly longer term perspective as well? Thanks. Those would be my questions. Thanks.

53:44 Let me take the last two questions, Madhukar's first, and then I'll ask. On the strain question, this is largely happening because of credit light business, which kind of causes And credit light plus the GST charge that has come in the first half, it was not there in the previous year for the first half. I mean the quantum was fast smaller. That's largely the attribution of strain. And on your question around protection, look, we did enjoy post the GST change a very sharp lift and the good part of that lift was there was almost 85% incremental customers who were coming and buying.

54:35 Now on a high base, we did expect some moderation to happen. Even in our planning for the full year based, we have resumed production numbers to moderate. And that's largely I mean, I don't think there is anything to lean beyond it. We all efforts underway. There is some refresh on the products also being done from a production business perspective. But it's a very large base on Protection business that we do have for ourselves. But despite that, I think overall, earlier in the call, there were questions around margins, etcetera, on overall basis. I think more optimism on our twenty five, twenty six spectrum that more closer to 26 than to '25, 25.5 is what we see at the moment. I think on the question on access bank that you asked, whenever one, this is still a consultation paper, Madhu Karb. But when a consultation paper comes more than reaching out to the distributors, you do some scenario analysis internally in terms of how the entire mathematics and the scenario will really play out. From that perspective, yes, we are confident that the banks will ideally, at some point, should consolidate the number of players. Have we had that formal conversation either with Axis or any other bank? Answer is no, we haven't. So that discussion is still open. This is just basis of where we see in all probability the situation playing out.

55:54 On the growth as far as Axis Bank is concerned, and we appreciate the question because it came earlier also. I think we also need to bear in mind that last quarter, if I'm not mistaken, quarter one, that is we actually grew at 14% at Axle Bank. And when I look at quarter four, we actually grew at some 9% to 10. So I think from that sense, the growth has been largely okay, while obviously you can do much more, and that's really the endeavor. And that's the reason why we have taken a transformation project for Iverson Plus because the opportunity is so great at Access Bank. Also, when you really break down the July, August and September numbers, you will find us to be slightly lacking as far as only August and September is concerned. And that was more on account of some of the product calls that we took and not because of any systemic issue. So I just want to give everyone some comfort around it that our growth at access has actually been inching northwards.

56:47 And we've been pretty consistent over the last seven, eight, ten months in terms of the growth coming there. Yes, we can surely do more, and that's really the endeavor as far as H2 is concerned. So what is our counter share there? Are we losing counter share or the channel growth slowed down? Because it seems that probably we're losing a little bit of counter share over there. Yeah. Our counter share, for example, we normally continue to maintain around 65%. That has always been the case. If I look at this month, we should be around back at the same number as we go ahead. For the months of August and September, I think we came slightly lower, making our counter share, I think, in quarter two at around 62%, 63%. But that was, again, like I said, more some of the conscious calls of product led where we wanted to participate. That was the reason.

57:35 And nothing to do with competitive intensity in that channel or you think you should be able to recover that comp share again? Yeah. We've always displayed that. By the time we end this year, in fact, starting this quarter itself, you'll see the change coming. It, sir. Thank you, and all the best. Thank you. Thank you. The next question comes from the line of Sanket Gouda with Aventis Park. Please go ahead. Yes, Thank you for the opportunity. So the annuity number, what we did in current quarter, $5.26 crores, can you just give a color how much of bulk is contributed by the newly launched variable annuity?

58:21 Because growth was phenomenal, has that product played a role? And is it fair to say that given the product did well probably in the current quarter, was the key driver for the margin delta what you reported in the current quarter? So that's what my first question. You want to give the second also if there is one coming that will just help us then articulate both Sankit. If there's any other And the second question is on riders. I mean, if I look at first half number, which you reported for the first time, the growth looks a little soft around two percentage. Just again, want to understand the softness, is it because of we were very, very significantly penetrated, so the scope was limited available incrementally and that's why your rider growth has softened a bit? Or or again, interlinked only, I'm just asking, is it because you lips have moderated, and and the growth has, slowed down along with the you lip thing?

59:28 And related to again ULEP is your persistency. What I've seen thirteen month persistency is off by compared to the last year. Again, is it fair to say it is ULEP led and given you guys have sold a lot of tulips in a weak market, Tulip are seeing the most amount of persistency correction relatively. Just wanted to understand that point. So thanks, Sanket. Variable annuity product, which we launched in the quarter two, did contribute more than 50%. Actually, there was an earlier product that did very seamlessly replaced. So yes, there has been a contribution of the variable annuity product in the quarter two.

1:00:15 On Riders, actually your question is... On variable annuity, margin profile of the product is the key reason why your profit margin looked better than expected in our view, better than expected in the current quarter? No. I won't say that actually. The margins was of the running product and this product was similar ish in the range. It is it was more a story to the consumer that there is a participation in over long horizons and equity kind of a play, which helps. So that I don't think is a reason which you can attribute that there is a lift up of annuity margin because of this new product. Margin profile is a similar issue. Understood. Yes. From your rider question, actually your question itself had the answer. You have identified it correctly. So our riders have grown 19% in the first half.

1:01:07 And the softness of 19% is also largely because of inherent softness in eulips as an overall demand category, which where and we had already kind of in the run rate move to attachments on those eulip designs. So the rider component coming out of ULEP has only grown on a single digit low small single digit kind of a number, actually. Persistency stress is actually concentrated in the non par design as we had told in the last call as well. Some of those designs of products which were launched in the previous financial year did give us some challenge with respect to persistency outcome. And as we clarified last call as well that in the month of March itself, we had discontinued it. And for the whole decision taken during the month of March to discontinue a product, which where we were seeing distress. So we have stopped selling that kind of a design anymore.

1:02:05 Now so what will happen to persistency is that initially, in the previous financial year, we had started putting some controls in the second half of the year. So as the quarters progress, you should see persistency no longer deteriorate, in fact, on the contrary, improve with improvement kicking in quarter three, quarter four on that particular as the base of the problem product kind of keeps reducing. The ULIP persistency, I think the specialized, as you called it, term ULIP first product, which actually sold as a protection first story than a unit linked story is okay. It's actually doing fairly fine. It is just that there will be some pluses and minuses.

1:02:52 Some riders which are attached in some eulips, there are some pluses and minuses happening. But overall stress largely has happened because of nonpodestating design. Understood. And lastly, one small thing I want to check. Given you're growing strongly annuity, from a capital consumption point of view, if I compare it with a non par, is it fair to say that annuity and within that variable annuity design consumes little less? And therefore, from a capital efficiency point of view, until the new money comes in from either Axis or QRP, whatever you take a call eventually, will help from solvency or capital consumption perspective? Your observation is correct. Annuity does consume lesser capital.

1:03:39 Understood. Perfect. And also, it's a bit of a channel mix where you sell and how you sell on those levers that you're always using. Understood. Understood. Thanks. That's it from my side. Thank you very much. Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. I now hand the conference over to the management for their closing comments. Thank you. Thank you, ladies and gentlemen, for being on Max Financial's earnings call. We look forward to more such interactions in the future. Thank you. Once again, goodbye. Thank you, sir. On behalf of Max Financial Services Limited, that concludes this conference. Thank you for joining us today, and you may now disconnect your lines. Thank you.