 "UK-based Bupa likely to increase stake in Niva Bupa Health Insurance")
UK-based Bupa, which currently holds a 56 per cent stake in Niva Bupa Health Insurance, may consider increasing it in the future, said Krishnan Ramachandran, MD & CEO of the standalone health insurer.
This comes a week after Finance Minister Nirmala Sitharaman announced a hike in the Foreign Direct Investment (FDI) limit in the insurance sector from 74 per cent to 100 per cent in her Union Budget speech.
“They (Bupa) are a long-term shareholder; clearly they are very excited about the India opportunity. I am sure in the times to come, they will think about increasing their stake,” Ramachandran said. Currently, the UK-based healthcare services company Bupa Singapore Holdings has a 55.98 per cent stake in the recently-listed standalone health insurer. Fettle Tone LLP holds another 17.9 per cent stake. The company was listed on the exchanges in November 2024.
According to Ramachandran, investments in technology, data, and analytics will aid the company in handling greater volumes and bring down its combined ratio to 95-96 per cent in the next 5 years from the existing 100.9 per cent. Combined ratio, which is a measure of profitability for a non-life insurer, when below 100 per cent indicates that the company is making an underwriting profit, while a ratio above 100 per cent means that it is paying out more money in claims than it is receiving from premiums.
“In terms of the combined ratio, the company is working towards a target below 100 per cent. We ended last year at around 98.8 per cent. We will aim to achieve a combined ratio of 95-96 per cent in the next five years. Operating leverage and economies of scale will aid in achieving this,” Ramachandran said.
In the October-December period (Q3FY25), the company posted 189 per cent growth in profit to Rs 13.2 crore. In the April-December period of FY25, the gross written premium (GWP) of the company rose by nearly 30 per cent to Rs 5,011.3 crore from Rs 3,848.1 crore in the year-ago period.
However, the insurance regulator introduced a new framework for premium reporting effective from October 1, 2024. According to the revised framework, Niva Bupa’s GWP for Q3FY25 is Rs 1,442 crore, up 2.1 per cent year-on-year (YoY). Likewise, for a 9-month period, its GWP stood at Rs 4,684 crore, up 21.7 per cent Y-o-Y.
“The company is also expecting an overall compound annual growth rate (CAGR) of 25 per cent in the next 5 years, supported by a healthy mix of retail and group products,” Ramachandran said. Retail health accounted for 67 per cent, group health for 30.8 per cent, and personal accident & travel accounted for 2.3 per cent.
“On the back of higher than the category growth rate, Niva Bupa’s retail health market share has increased from 9.0 per cent to 9.6 per cent. We have a healthy mix of retail and group products. On government business, I will look at it as and when the opportunity opens up,” Ramachandran added.