The markets have “conservatively” priced Max Financial Services (MFS) — the first Indian listed company exclusively focused on life insurance — and not looked at the fundamental strength of the underlying business. Rajesh Sud, Executive Vice-Chairman and Managing Director, Max Life Insurance, said there is “headroom” for improved valuation. The value capture of the life insurance business started on the bourses in end January.The ticker name got changed into MFS in late February. MFS now controls 72 per cent in Max Life Insurance, the operating subsidiary. In his first interview after the listing of MFS, Sud spoke, among other things, about Max Life’s strategic focus areas. Excerpts:

How do you see the value discovery of the life insurance business by the markets after conclusion of the demerger in January?

Value, at best, is a shareholder matter. Beauty lies in the eyes of the beholder. From an operating company point of view, our karma is to perform the best.

However, I feel there is more headroom for valuations to improve. This is given the kind of business that we run and the franchise we have built. Even the analysts’ reports point to this and indicate the headroom.

Has life changed for Max Life Insurance post-listing of MFS?

No, life has not changed for us at the operating company level. The only thing is there will be increased focus on better corporate governance, having fair degree of disclosures and transparency.

Also, now interface with external market, such as analysts, will be stepped up.

What are the areas that you will be focusing on this fiscal?

There are three focus areas for us. These are to continue achieving growth (both sustainable and profitable growth), improve on protection sales and the last ‘digitisation’. Nearly 25 per cent of the company’s revenues (both new policies and renewals) come from the digital route.

Where do you see future growth coming from — organic or inorganic?

We will look at both. We are very keen on inorganic growth and open to make acquisitions. We have been the most consistent performer. Unlike many, we have not had ups and down with every market event. It is M&As that is going to take us to the next level of growth. We are also looking at opportunities in the bancassurance space. Regulations have now been changed to allow banks to tie up with three insurers each in every segment. This could lead us to do more plain vanilla bancassurance tie-ups.

The other big opportunity for growth is mergers and acquisitions. We will look for targets such as insurers that are not doing well but have banks in their portfolio.

What are your long-term goals? What are the broad contours of the strategic roadmap of ‘Life at 2025’?

Yes, our long-term strategic plan of ‘Life at 2025’ has been frozen after discussions at the board level. We want to grow big on the ‘retirement’ space and offer holistic propositions. New regulations have made retirement products less flexible. Now we are very keen to build this side of the business.

After change in regulations, retirement products have turned into a trickle scaling down from 7-8 per cent levels in the industry to just 1 per cent.

The second area of strategic focus will be acquisitions. The third will be to morph into a digital advisor-based platform. We see a large number of people in India moving to digital platforms for advice on financial planning and choice of financial products.

What about payment banks? Do you see a role for a life insurer here?

We are open to bancassurance tie-ups with upcoming payment banks. This will open up access to another segment of market that insurers are at present not tapping into.

The RBI is focused on reaching the unbanked. For any bancassurance tie-ups with payment banks, one may need to go for an approval process with the regulators. However, I don’t see any problem in receiving such approvals.

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