Rationale

 The rating factors in Max Life Insurance Company Limited's (Max Life) strong promoter profile, with Axis Bank (rated [ICRA]AAA (Stable)/[ICRA]A1+) holding a 12.99% stake along with its subsidiaries (Axis Capital and Axis Securities) in the company. Moreover, the Axis Group (Axis) has a right to acquire an additional 7% stake in Max Life. The rating factors in Max Life's strategic importance to Axis and the expectation of support from Axis as and when required. Axis has been associated with Max Life as a distributing partner with a high share of 64% in its individual annualised premium equivalent (APE) for FY2022. With the stake acquisition, Axis has strong board representation in Max Life (three directors appointed by Axis along with a right to Chairmanship on a rotation basis). While Axis has a presence across the financial services segment, Max Life will help improve its foothold in the insurance business and is of strategic importance to Axis. Apart from Axis, Max Financial Services Limited and Mitsui Sumitomo Insurance Company Limited (MSI; rated A1/A3[hyb]/Stable by Moody's) held 81.83% and 5.17%, respectively, in Max Life as on June 30, 2022. The rating also factors in Max Life's established presence in the individual life insurance segment with a market share of 6.8%, on new business premium (NBP) basis, in the private sector. Max Life's gross premium written witnessed a strong YoY growth of ~17.9% in FY2022, supported by both new business and renewal premium. Its new business mix witnessed a shift in FY2021 and FY2022 with the increasing share of non-participatory (non-par) products (28.7% of the APE in FY2022). Apart from nonpar and protection products, unit linked insurance plans (ULIPs) and par products had a share of 37.3% and 20.4%, respectively, in the APE of FY2022. While the company has been focussing on retail protection (7.1% of APE), the same was lower in FY2022 due to a conscious management strategy in light of the Covid-19 pandemic. The business mix is largely expected to remain stable, barring an increase in the retail protection segment. The rating also considers the company's comfortable solvency and healthy profitability. Max Life has a comfortable capitalisation profile with a solvency ratio of 201% as on March 31, 2022, higher than the regulatory requirement of 150%. Its profitability has been healthy with the value of new business (VNB) margin (VNB/APE) consistently increasing in the last five years to 27.4% in FY2022. While the company reported a return on equity (RoE) of ~19-20% in the last five years till FY2021, the net profitability was lower in FY2022 with RoE of 12% compared to 19% in FY2021. The above-mentioned factors are partially offset by the company's high operating expenses compared to peers. Further, the growth in the VNB margin and profitability would depend on Max Life's ability to improve its operating efficiency. ICRA also takes note of the competition in the life insurance segment. The ability to profitably grow its business, in light of the intense competition and the ever-evolving regulatory framework, would be a key monitorable