Rationale

 The rating factors in Axis Max Life Insurance Limited’s (Axis Max Life) established presence in the individual life insurance segment with a diversified distribution network. The company was among the top 5 private insurers1 with an overall market share of 6.3% in H1 FY2025 (6.4% in FY2024) in terms of individual adjusted first year premium2 . The rating also considers the comfortable solvency with a solvency ratio of 1.98 times as on September 30, 2024, up from 1.72 times as on March 31, 2024, following the capital infusion of Rs. 1,612 crore3 in April 2024. The profitability is healthy with an annualised return on embedded value (RoEV) of 20.2% in FY2024 (22.1% in FY2023). Moreover, the embedded value (EV) increased at a compound annual growth rate (CAGR) of 17% during FY2019-FY2024 to Rs. 19,494 crore as on March 31, 2024 (Rs. 23,338 crore as on September 30, 2024). The rating factors in the company’s strong promoter profile, with Axis Bank Limited (Axis) holding a 19.02% stake along with its subsidiaries (Axis Capital Limited and Axis Securities Limited), as on September 30, 2024 (up from 12.99% as on March 31, 2024). On December 13, 2024, the company rebranded itself to Axis Max Life Insurance Limited from Max Life Insurance Company Limited, further strengthening its strategic importance to the bank and ICRA’s expectation of support as and when required. Axis has been associated with Axis Max Life as a distributing partner with a share of more than 52% in its individual annual premium equivalent (APE) in FY2024 (declined to ~45% in H1 FY2025). Axis has strong board representation at the company (five directors nominated by Axis, including the Chairman). While Axis has a presence across the financial services segment, Axis Max Life’s foothold in the insurance business is of strategic importance to the bank. The other promoter, Max Financial Services Limited (Max Financial), is a widely-held listed company with an 80.98% stake in Axis Max Life as on September 30, 2024. The company’s operating expenses remain high compared to large private life insurance players, given the significant share of individual business in its overall business. The growth in the value of new business (VNB), VNB margin and profitability would depend on Axis Max Life’s ability to increase its APE and improve its operating efficiency. The profitability and solvency may remain susceptible to changes in the actuarial assumptions, leading to long-term changes in the reserving requirements. The Stable outlook factors in the expectation that the company will continue to receive support from Axis, if required, and will maintain its solvency level above the negative rating trigger of 1.70 times.