Max Life Insurance looks at ESG as a strategy

Private life insurer Max Life Insurance Company has embarked on a journey towards becoming an environment, social and governance (ESG)-focused organisation, saidManaging Director and CEO Prashant Tripathy.  

As part of its efforts to get ESG-focused, Max Life Insurance has resolved that 75 per cent of its existing ₹25,000-crore equity funds portfolio will be invested in ESG-compliant companies by end-March 2023.  Moreover, 100 per cent of equity portion of its shareholders funds (estimated at ₹3,000 crore) will be going towards ESG.

“We are now making a very large commitment to ESG. Max Life is looking to morph itself into a savvy, sensitive ESG-compliant organisation. Not only will our investments be biased to ESG, we are also looking at ESG as a strategy,” Tripathy told BusinessLine,sharing the contours of this strategy.

Industry-first ESG fund

Also as part of the ESG focus, Max Life Insurance has decided that ESG principles will be 100 per cent integrated to its equity research and decision-making process. 

The insurer had recently set up an industry-first ESG fund — Max Life Sustainable equity fund — that is mapped to an ULIP (launched in May). This is a 100 per cent ESG-compliant fund along with new ULIP plan and will be making investments only in ESG-compliant organisations, Tripathy said.

On the business reason behind the company’s ESG focus, Tripathy said, “The reason why we have chosen to focus on ESG is that over the last one year and even five years, we find that Nifty100ESG index has performed better than normal Nifty100”.

This ESG focus is expected to increase Max Life’s attractiveness to global investors over the next few quarters, he added.

“Globally about one trillion dollars of investments have gone in 2020 into ESG funds. ESG-focused companies tend to do better on operational efficiencies and costs of capital and long-term impact on shareholders,” Tripathy said.

He explained that in the current times it is not enough to only be a high-performing organisation. One also needs to be a good company, which means having high commitment to ESG, he added.

Pension fund management

Max Life Insurance, which is now in the process of setting up a subsidiary for pension fund management, expects this venture to come into play in the second quarter this fiscal, Tripathy said. This subsidiary is being called ‘Max Life Pension Fund Management Ltd’ and has already got both PFRDA and IRDAI approval to commence pension fund management business operations.

The move to establish a new subsidiary is well-aligned with the life insurer’s broader fund management strategy and strengthens its position within the retirement space.

Meanwhile, in a separate initiative, Max Life Insurance will approach pension regulator PFRDA in the next six months for a licence to be a Point of Presence (PoP) for distribution of National Pension System (NPS) through the company’s own channels.

“We will be engaging in discussion with PFRDA to create PoP points for us.  This would happen under Max Life Insurance. Once we get a licence, we could open NPS account and solicit business on NPS as a PoP. We already have a licence for being an Annuity Service Provider,” Tripathy said.

Tripathy said that Max Life Insurance was developing its pension business in all seriousness and setting up desired organisational structure around it. “We are in the process of looking out for a CEO. We are very hopeful that we will make great strides in that area”,  he said.

COMMENT NOW