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The stock of Max India rallied 6 per cent on Wednesday after the Congress gave a go-ahead to the insurance bill, which proposes to increase FDI in the insurance sector from 26 per cent to 49 per cent. The report, which has been tabled in the Rajya Sabha, looks set to become a law, with the Government keen on pushing the legislation before the end of the winter session of Parliament.
The passing of the bill, if it finally comes through, will be a welcome move for Indian players, who will get access to much-needed capital to grow. Both life and general insurance companies have been through a series of regulatory changes in the last couple of years. Players have been rebalancing their product basket and focussing on cost efficiencies. With the economy expected to revive over the next year or so, the opening of the sector will provide a leg-up to insurance players.
Max India is an insurance player with interests across life and heath insurance, as well healthcare businesses. Max Life (Max India holds 71 per cent stake) is one of the key life insurers in the country that has delivered strong performance and gained market share. The annualised premium equivalent (new business) grew by 10 per cent in the first half of 2014-15. The company had a market share of about 10.7 per cent among private players as of September 2014.
Max Bupa (health insurance) in which Max India holds 74 per cent stake, is also a fast-growing business. Max Bupa is one of the four standalone health insurers in the country. Given the increasing medical costs and growing awareness of medical insurance products, this market is expected to grow at a healthy pace in the coming years. The net premium for Max Bupa grew by 46 per cent in the first half of this fiscal.
Max Healthcare, that operates a network of hospitals in North India, is a joint venture between Max India (46 per cent stake) and South African player Life Healthcare (46 per cent). Max Healthcare focuses on high-end specialised care. This business started to show significant improvement, turning cash positive in 2013-14. During the September quarter, cash profit grew 180 per cent from Rs 8 crore to Rs 22 crore.
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