Bharti AXA Life Insurance plans to break even by FY27: MD & CEO Parag Raja

Parag Raja outlines the 5-year roadmap of Bharti AXA Life Insurance

Parag Raja, managing director (MD) and chief executive officer (CEO), Bharti AXA Life Insurance, outlines the company’s five-year roadmap — after stake acquisition (of 15 per cent) by 360 ONE Asset Management — in an interview with Aathira Varier in Mumbai. Edited excerpts:

 

Following 360 ONE’s stake acquisition, what changes is the company implementing strategically?

 

We also had to solve for growth capital, which we did with 360 ONE coming onboard with around ₹450-500 crore. This sets up well for what we are internally calling Bharti AXA 2.0, which is the next five years (FY30). The first goal is to achieve 3x revenue. Our new business premium (NBP) is around ₹700 crore, which we want to take to ₹2,000 crore. Our aim is to take the gross premium of ₹3,000 crore to about ₹7,000 crore in five years. The second big goal is to ensure that our margins and embedded value grow. We are targeting a value of new business (VNB) margin at 25 per cent in the next five years. We also intend to have another investment coming in the next 2-3 years. The last piece is the profits that we will start to generate from here on. That also, we will plough back. We will need about ₹1,500-1,600 crore in the next five years. 

 

As you aspire to plough back profits, when do you plan to break-even?

 

Our break-even is planned for FY27. We saw about ₹37 crore loss in FY25; it was ₹146 crore in FY24. We do not intend to be over indexed on either a particular distribution channel or product segment. About 30-40 per cent of our business will come from non-par; 15-20 per cent from unit-linked insurance plans (Ulips); and 15-20 per cent will be par products. Currently, the mix is a little skewed towards non-par. 

 

Since you don’t want to be indexed on a particular channel, what are your plans for distribution?

 

Our focus is to make sure that minimum 50 per cent of our sales come from proprietary channels. We want to expand distribution and we are going to enter into new partnerships as well. In FY20, more than 50 per cent of our sales came from corporate agents and brokers. Today, it has come down to 25 per cent. We have also increased our bancassurance partnerships to eight banks. With 360 ONE coming on board, it helps us in two ways — we have got growth capital and it also gives us access to a very different super high net worth (HNI) clientele. We have also signed up with Nuvama, Spark and Blue Chip — some of the key marquee partnerships in the last 4-5 months. This is all happening with a view of launching the Bharti AXA 2.0. 

 

In FY25, performance of the life insurance industry was muted both in premium and sale of policies…

 

The retail segment of the industry posted 8-9 per cent growth in FY25. The industry growth was 20 per cent in H1FY25 and H2 was almost muted due to surrender-value regulations. The regulations, which are beneficial for the customer, are also good in the long term. But in the short term, the industry had to make some changes. The industry had to relook at distributor compensation and commercial deals with institutions and agents. This led to a readjustment. While the growth in policies has been flat, the ticket size has increased by 20 per cent for almost five years. There has been a change in the customer segment and distribution channel. Owing to this, ticket sizes are growing while policy growth in numbers has been flat.

 

What is your expectation on the industry’s performance in the coming years?  

 

The industry will grow about 10-12 per cent in FY26. But our Bharti AXA 2.0 journey requires us to grow at over 40 per cent in FY26. We are targeting this growth and eyeing 25 per cent compound annual growth rate (CAGR) in five years.