Max Financial Services Ltd Management Discussions

- MAX FINANCIAL SERVICES LIMITED

Global Economic Outlook

The global economy remained resilient during FY 202526, despite persistent geopolitical tensions, evolving trade dynamics, and inflationary pressures. Growth was driven by robust performance in emerging markets, stable labour market conditions in advanced economies, selective monetary easing, and continued investments in digital infrastructure and artificial intelligence.

According to the International Monetary Fund (IMF), global growth is projected at approximately 3.1% in 2026, indicating a moderate yet stable expansion driven by technology-led productivity gains and resilient consumer demand, albeit with regional divergence. Advanced economies are expected to grow at a relatively slower pace due to subdued demand and fiscal constraints, while emerging markets are likely to remain key contributors to global expansion, driven by consumption-led growth, infrastructure investments, and urbanisation trends.

Inflation, while moderating, remains above target levels

Global headline inflation is expected to increase marginally from 4.1% in 2025 to 4.4% in 2026, before moderating to 3.7% in 2027, influenced by elevated energy prices and geopolitical developments.

In this evolving environment, Central banks are expected to gradually pivot towards supportive monetary policies while maintaining vigilance on price stability.

in certain regions. Global headline inflation is expected to increase marginally from 4.1% in 2025 to 4.4% in 2026, before moderating to 3.7% in 2027, influenced by elevated energy prices and geopolitical developments. In this evolving environment, Central banks are expected to gradually pivot towards supportive monetary policies while maintaining vigilance on price stability.

Regionally, the United States economy is projected to grow by 2.3% in 2026 and 2.1% in 2027, reflecting a gradual moderation due to elevated interest rates and softening consumer demand. The Euro area is expected to grow at 1.1% and 1.2% in 2026 and 2027 respectively. Despite near-term uncertainties, the medium- term outlook remains constructive, underpinned by innovation, digital adoption, and the continued resilience of emerging economies.

Indian Economic Outlook

India continued as the fastest-growing economy globally in FY26, demonstrating resilience amid global uncertainties. Real GDP is estimated to have grown by 7.6%, while Gross Value Added (GVA) expanded by 7.7%, underpinned by strong domestic fundamentals.

Private consumption remained the primary driver of economic growth, accounting for over 61% of GDP— the highest share in over a decade. Growth was further enabled by improving rural incomes driven by favourable agricultural conditions and a gradual recovery in urban demand. High-frequency indicators such as vehicle sales, digital transactions, and air traffic reinforced sustained consumption momentum.

Investment activity strengthened during the year, with gross fixed capital formation (GFCF) growing by 7.8%. This growth was driven by continued public capital expenditure and a recovery in private sector investments, supported by improving business confidence and strong capacity utilisation levels. Persistent infrastructure development has further reinforced the investment cycle, providing a durable foundation for future growth.

A key policy development during the year was the recent Goods and Services Tax (GST) related rationalisation on individual life insurance premiums effective September 22, 2025. This reform has significantly improved affordability, acting as a strong demand catalyst and supporting the Governments vision of “Insurance for All by 2047."

The services sector remained the principal growth engine, expanding by over 9%, led by financial services, real estate, and professional services. The industrial sector also gained traction, growing by 6.2%, supported by manufacturing resilience and strong construction activity. The agriculture sector expanded by 3.1%, benefiting from favourable monsoons and steady growth in allied activities.

Macroeconomic fundamentals strengthened during the year, with easing inflation, prudent fiscal management, and calibrated monetary policy supporting liquidity and credit growth. Indias external sector remained resilient, supported by stable services exports and adequate foreign exchange reserves.

Looking ahead, India is well positioned to sustain growth in the range of 6.5%-7%, supported by domestic demand, an improving investment cycle, and ongoing structural reforms, notwithstanding external risks.

Industry Structure, Developments, Opportunities and Threats

Life Insurance Industry Overview

The Indian life insurance industry continues to undergo structural transformation and sustained growth, driven by favourable demographics, rising financial awareness, and regulatory reforms. India ranks among the top ten life insurance markets globally.

In FY2025, the life insurance industry recorded total premiums of approximately 8.9 lakh crore, reflecting a growth of 7% year-on-year. Premiums are expected to reach around 10 lakh crore in FY2026, with new business premiums growing at approximately 15.7%.

Despite the progress, insurance penetration remains low at 3.7%, significantly below the global average of 7.3%, indicating substantial untapped potential. Insurance density increased marginally to USD 97 in FY2025.

A key policy development during the year was the recent Goods and Services Tax (GST) related rationalisation on individual life insurance premiums effective September 22, 2025. This reform has significantly improved affordability, acting as a strong demand catalyst and supporting the Governments vision of "Insurance for All by 2047."

Structural drivers such as rising disposable incomes, increasing formalisation of savings, favourable demographics, and digital adoption continue to underpin industry growth. The distribution ecosystem is evolving rapidly with bancassurance expansion, growth in agency networks, and increasing digital and embedded insurance models. Technology, including data analytics and artificial intelligence, is playing a transformative role in underwriting, distribution, and customer experience.

Industry Performance and Trends

Life insurance continued to dominate the overall insurance sector, contributing 74.2% of total premiums in FY2025. Renewal premiums accounted for 55.1% of total

In FY2026, private insurers outperformed the broader industry. Individual adjusted first- year premiums for private players grew by 12% to 95,478 crore, compared to 5% growth for LIC. Policy volumes also grew faster for private insurers, highlighting increasing competitiveness and a gradual shift in customer preferences.

premiums, while new business premiums constituted 44.9%.

In FY2026, private insurers outperformed the broader industry. Individual adjusted first-year premiums for private players grew by 12% to 95,478 crore, compared to 5% growth for LIC. Policy volumes also grew faster for private insurers, highlighting increasing competitiveness and a gradual shift in customer preferences.

Regulatory Developments

The regulatory landscape continues to evolve, fostering increased inclusion, transparency, and efficiency. The Governments vision of "Insurance for All by 2047" remains central to sectoral development, aiming to enhance penetration and expand coverage.

The Bima Trinity initiatives—Bima Sugam, Bima Vistaar, and Bima Vahak—are expected to drive digital transformation, improve accessibility, and expand distribution. Schemes such as the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) continue to enhance financial inclusion.

Additional reforms, including GST rationalisation and enhanced surrender value norms, are improving affordability, strengthening policyholder protection, and building long-term trust in the industry.

Corporate Developments

Max Financial Services Limited (MFSL) continues to operate as the holding company for Axis Max Life Insurance Limited ("AMLI"), with an 80.98% stake as of March 31, 2026.

During the year, the Board approved the proposed amalgamation of MFSL into AMLI, subject to regulatory and stakeholder approvals. The proposal has received inprinciple support from Axis Entities and is aligned with evolving regulatory framework.

The Company continues to advance its capital management initiatives. The fundraising plans were revised to 1,600 crore following a proposed capital infusion by Axis Bank upon receipt of requisite nod from Reserve Bank of India allowing Axis Bank to invest upto 389 crore in AMLI. AMLI proposes to raise up to 389 crore by way of a preferential allotment of equity shares to Axis Bank against an additional stake of 0.98%, following which Axis entities will hold a 19.99% stake in AMLI.

Risks and Concerns

MFSL and its operating subsidiary, AMLI, operate in a dynamic business environment and are exposed to various risks that could impact financial performance and operational outcomes.

The Company has established a robust risk management framework, supported by a dedicated Risk Management Committee and active oversight by senior management, to systematically identify, assess, and mitigate risks including Strategic, Operational, Compliance, and Financial & Reporting risks.

AMLI also has a Risk Management Framework that enables it to appropriately develop and implement strategies, policies, procedures and controls to manage its key risks.

While the Indian life insurance industry continues to demonstrate strong growth momentum driven by favourable demographics, regulatory support, and increasing financial awareness, the operating environment remains subject to several evolving risks and challenges.

The industry is witnessing a shift in customer expectations

towards more transparent, simplified, and digitally enabled products and services. Failure to keep pace with these changing preferences may affect customer acquisition, persistency, and overall competitiveness.

Demographic trends, including increasing life expectancy and a rising geriatric population, continue to pose underwriting and actuarial risks, requiring continuous refinement of pricing models and risk assessment frameworks. In addition, concerns relating to mis-selling, delays in claims settlement, and customer grievances may have reputational and regulatory implications if not effectively managed.

The industry is also exposed to macroeconomic and geopolitical uncertainties, which may influence investment performance, consumer sentiment, and overall demand for insurance products. Further, the growing frequency and severity of climate-related risks may have a long-term bearing on mortality assumptions and portfolio performance.

With the increasing adoption of digital platforms, cybersecurity and data privacy risks have assumed greater significance. Any breach or disruption may adversely affect business operations, customer trust, and regulatory compliance.

In response to these evolving risks, regulators including the Insurance Regulatory and Development Authority of India (IRDAI), in coordination with other financial sector regulators, continue to strengthen the regulatory framework with a focus on governance standards, technology risk management, cybersecurity resilience, and third-party risk oversight.

AMLI is committed to proactively identifying and mitigating these risks through continuous strengthening of its risk management systems, enhancement of digital capabilities, and focus on customer-centric practices, thereby ensuring sustainable growth and protection of stakeholder interests.

Internal control systems and their adequacy

The Companys internal controls are commensurate with its size and the nature of operations. The Audit committee of the Company evaluates internal financial controls. As a part of such internal controls, the internal auditors conduct regular audits and bring to the attention of the

Audit Committee any deficiencies and weaknesses in the internal control systems, if any. The Audit Committee reviews and monitors the remedial actions to ensure its overall adequacy and effectiveness

Discussion on financial performance with respect to operational performance Business Performance

MFSL reported consolidated revenues of 47,696 crore in FY2026, reflecting a 3% year-on-year growth. Excluding investment income, revenues growth was a healthy 17%, reflecting a strong underlying business momentum. Consolidated profit after tax stood at 106 crore, impacted primarily by GST-related adjustments and fair value changes.

AMLI delivered a strong operational and financial performance, outperforming both the private sector and the broader industry. Individual adjusted first-year premium grew by 19%, significantly ahead of industry growth, leading to a 56-basis point increase in market share to 10.4%. Total new business premiums rose by 19% to 14,503 crore, while renewal premiums grew by 16% to 24,374 crore, resulting in gross written premiums of 38,877 crore. Total APE increased by 20%, supported by an 18% rise in policy issuance. Sum assured expanded by 27% to 27.8 lakh crore. Growth was broad-based

MFSL reported consolidated revenues of 47,696 crore in FY2026, reflecting a 3% year-on- year growth. Excluding investment income, revenues growth was a healthy 17%, reflecting a strong underlying business momentum. Consolidated profit after tax stood at 106 crore, impacted primarily by GST-related adjustments and fair value changes.

across channels, with proprietary channels growing by 28% and partnerships by 14%, increasing the proprietary channel contribution to sales from 42% to 45%.

New business growth was driven by strong performance in retail Protection & Health and annuity segments, which grew by 53% and 113%, respectively. Profitability metrics improved, with new business margins expanding to 25.2% and Value of New Business increasing by 26% to 2,647 crore. Embedded Value rose by 15% to 28,871 crore, with a return on embedded value of 18.7%. Assets under management reached 1.9 lakh crore, while solvency remained strong at 194%. AMLI also onboarded 60 new partners during the year.

Key financial ratios and explanation, if there are any significant changes

Please refer to the details as provided under note no. 44 of the Notes forming part of the standalone financial statements for the financial year ended March 31, 2026.

Material developments in Human Resources front, including number of people employed

The Company remains committed to building a diverse and future-ready workforce. AMLI has been recognised by Great Place to Work? with the Laureate distinction for being among Indias Best Companies to Work For over a decade.

AMLI places strong emphasis on employee well-being as a holistic, inclusive, and familycentric commitment that extends beyond the workplace. During FY26, AMLI has further strengthened its integrated wellness ecosystem, providing comprehensive support across physical, mental, emotional, financial, and social wellbeing.

Diversity and inclusion remain key priorities, with a workforce diversity ratio of 29.3%. Women represent over 40% of the sales force and 35% of the contractual workforce.

AMLI places strong emphasis on employee well-being as a holistic, inclusive, and family-centric commitment that extends beyond the workplace. During FY26, AMLI has further strengthened its integrated wellness ecosystem, providing comprehensive support across physical, mental, emotional, financial, and social well-being. A majority of these initiatives are accessible to employees as well as their families.

AMLI sustained focus on holistic, family-inclusive wellness has been recognised by Great Place to Work? (Top 50 Best Workplaces in Health & Wellness) and at the TV9 Health Tech Summit for Best HR and Wellness Practices.

The Company is also dedicated to fostering a culture of learning, offering opportunities for personal and professional growth.

No. of Employees as on March 31, 2026

Customer Experience

Customer-centricity remains at the core of AMLIs operations. Through its InstaClaim™ initiative, eligible claims are settled within one day, with approximately 60% of claims processed within this timeframe.

During FY2026, AMLI settled 20,529 death claims amounting to 1,641 crore. Persistency metrics remained strong, with the 13th-month persistency at 84.8% and the 61st-month persistency at 57.7%.

Customer satisfaction improved, with Net Promoter Score (NPS) increasing to 59, reflecting enhanced customer engagement.

"AI Works" at AMLI

During FY2026, AMLI advanced its "AI Works" initiative, leveraging artificial intelligence and advanced analytics

to enhance sales productivity, customer engagement, underwriting, and risk management.

Key interventions included AI-driven sales enablement tools, predictive analytics for customer retention, intelligent underwriting systems, and automation of service processes. These initiatives have improved operational efficiency, decision-making, and scalability.

During FY26, AMLI has further strengthened its integrated wellness ecosystem, providing comprehensive support across physical, mental, emotional, financial, and social well-being.

A majority of these initiatives are accessible to employees as well as their families.

Future Outlook

Indias insurance sector is expected to maintain strong growth momentum, with premiums projected to grow at approximately 6.9% annually between 2026 and 2030.

AMLI remains focused on its long-term strategy, centred on strengthening distribution, driving product innovation, enhancing customer experience, and leveraging digital transformation and artificial intelligence.

AMLIs strategic priorities include:

? Strengthening distribution and expanding proprietary channels

? Driving profitable growth through product innovation

? Enhancing customer-centricity across the value chain

? Leveraging data, analytics, and artificial intelligence

With a differentiated product mix, expanding distribution footprint, and continued investments in digital and analytics capabilities, AMLI is well placed to capitalise on the structural growth opportunity in Indias life insurance market.