Protection, annuity more relevant in insurance products: Sumit Madan, MD & CEO, Axis Max Life

Axis Bank and Max Financial are in talks for the former to raise its stake in their insurance joint venture and also a potential reverse merger of Axis Max Life with its listed promoter parent. The company reported a 17% rise in individual adjusted first-year premium, a 33% increase in value of new business (VNB), and an improvement in VNB margin to 23.2% during the June quarter. Its market share among private peers rose 13 basis points, fuelled by a 116% growth in annuity sales.

Speaking to ET, Sumit Madan, managing director and CEO at Axis Max Life, said the company has focused on protection and annuity products over the past two to three years, citing their need in the Indian market. Edited excerpts:

Why are protection and annuity in focus?


Coming from a bank, I always felt these are the kind of products that we have to sell. When you come from outside the industry, you look at how penetration can improve and what is not working. We have had discussions around products, affordability and various things that may plague the industry. Covid taught us that many policyholders are underinsured. The fundamental question is: If I die tomorrow, will my family have enough money to maintain the lifestyle?

Is the industry still struggling with the perception of insurance as a savings and tax product?

While things are changing, insurance is still seen as a bit of a savings and tax product. We are focusing on making protection and annuity more relevant across proprietary and partnership channels, where we are looking at growth of 15% or 16%. The discussion is around protection rather than just premium. We've started focusing very sharply on the young Indian middle class. E-commerce is helping us to target the young Indian middle class in a sharp manner.

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Your VNB margin has improved sharply to 23.2%. Is a VNB margin of about 25% sustainable?

We are doing the right things, and so 25% looks reasonably sustainable. The changes in profitability, portfolio clean-up and cost measures are sustainable and structural rather than temporary. They are not one-off measures implemented for a month.

What is the status of the proposed restructuring involving Axis Bank and the reverse merger?

Axis Bank has said that recent regulatory changes have created a bit of an enabling framework for such structures. Discussions and consultation with the relevant stakeholders are all currently underway. It is a little premature on my part to really comment on the specifics, but currently it is all under discussion. Give us time till October, we will be able to come with more clarity around it.

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Are both the Axis Bank stake increase and reverse merger being discussed? Is there a timeline for the NCLT process?

It's both happening. The Axis Bank discussions are also underway. The reverse merger discussions are also underway. More importantly, the regulator has made it slightly easier. Axis is discussing the same internally and, on the reverse merger, again, we are in touch with all the stakeholders. Things are moving, but you have to give us some time. It is difficult to give any timeline around it. Typically, it takes around six to 12 months once you approach the NCLT.