Max India announced the embedded value (EV) for its life insurance business at Rs 5,363 Cr as at September end as compared to Rs 5,232 crore at the end March 2015, a move that will help in price discovery at the time of listing of holding company of Max Life.
Earlier this year, Max India had announced corporate restructuring to vertically split the company through a de-merger, into three separate listed companies.
The move was aimed to give investors specific and undiluted access to its diverse lines of businesses, provide sharper focus to each underlying business, and unlock shareholder value.
All the three entities likely to be listed on Indian bourses in December as it is expected to get regulatory approval shortly.
Upon completion of the de-merger, the existing company, Max India will be renamed ‘Max Financial Services Limited’ (MFS) and will focus solely on life insurance activity, through its 72.1% shareholding in Max Life.
The second vertical under the name of Max India will continue to manage investments health and Allied businesses, that comprises— Max Healthcare, Max Bupa, Antara Senior Living and supported by a Corporate Management Services team.
The third vertical— Max Ventures and Industries Limited will house the investment activity in the group’s manufacturing subsidiary, Max Speciality Films Max Ventures and Industries Limited (MVIL)
The declaration of EV for Max Life will be used for benchmarking the for the price discovery of its holding company MFS after the listing some time in December. Max India has already a dividend of Rs 220 crore in first half of current fiscal.
In addition to declaring EV, the company has also said that the value of New Business (VNB) written during first of FY 2016 is Rs 163 crore.
EV and VNB are important metrics for the valuation of a life insurance business as the company is generally valued at a multiple to its EV. In April 2012, Mitsui Sumitomo Insurance picked up 26% stake in Max Life Insurance an implied EV multiple of around 3 times.