Niva Bupa Health Insurance Company Limited — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

Niva Bupa Health reported a strong quarter of top-line growth, with GWP up 28% on a comparable basis, led by its core retail segment. IFRS profitability showed significant improvement, nearly doubling year-over-year. However, the quarter was marked by two key issues: significant distortion in I-GAAP financials due to new accounting rules for multi-year policies, and a temporary operational halt in claims auto-adjudication. This halt impacted service levels and necessitated higher reserving, which inflated the reported loss ratio for the quarter. Management emphasized that IFRS financials are a better reflection of performance and that the operational issue has been resolved as of July 2025.

Highlights

  • IFRS Profit After Tax (PAT) nearly doubled to ₹70 crores from ₹36 crores YoY.

  • Gross Written Premium (GWP) grew 28% YoY on a like-to-like basis, excluding accounting impacts.

  • Retail health segment GWP grew strongly at 32% YoY, with retail market share increasing to 10% from 9.9%.

  • IFRS Combined Ratio improved by 70 bps to 103.2% from 103.9% YoY, driven by expense control.

  • Expense of Management (EOM) ratio improved significantly to 35.9% from 40.7% YoY due to operating leverage.

  • A temporary suspension of claims auto-adjudication led to higher reserving, impacting the Q1 loss ratio by an estimated 1.5-2%.

  • Solvency ratio remains robust at 2.86x, well above the regulatory minimum of 1.50x.

  • Executed a 7% price increase on the flagship product, ReAssure 2.0, during the quarter.

Concerns

  • Accounting Volatility from 1/n Rule

Key financials

  1. IFRS PAT ₹70 Cr +94.4%YoY
  2. GWP Growth (like-for-like) 28%
  3. Combined Ratio (IFRS) 103.2%
  4. Expense of Management (EOM) Ratio 35.9%
  5. Solvency Ratio 2.86×
  6. AUM ₹8,100 Cr

What they filed

Q1 FY27: revenue up 27.9%, net profit up 94.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,321 1,258 1,671 1,932 1,574 +19%1,611 +28%2,251 +35%2,471 +28%
EBITDA-66 -24 251 98 -53 +20%-94 −292%182 −27%184 +88%
Net profit13 13 206 71 -35 −369%-88 −777%159 −23%138 +94%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentShare of BusinessIFRS Loss Ratio
Retail67%68%
Group31%61%

Guidance & targets

Margin

  • Expense of Management (EOM) Ratio Margin · current financial year · Medium confidence Within regulatory limit
    And we are confident to bring down EOM ratio within regulatory limit in this current financial year. And we are almost there.

    — Vishwanath Mahendra, Chief Financial Officer

Profitability

  • Loss Ratio Trend Profitability · by end of the year · Medium confidence Stabilize by end of year
    Most probably, we are confident that trend should stabilize by end of the year and will release as we experience lower incurrence.

    — Vishwanath Mahendra, Chief Financial Officer

Risks & concerns

  • Accounting Volatility from 1/n Rule

    high

    Management stated I-GAAP financials will have 'noise' for the next 2-3 years, making analysis difficult and potentially confusing investors. They are pushing for IFRS as the primary metric.

    Management acknowledged

  • Operational Disruption in Claims Processing

    medium

    A temporary halt in claims auto-adjudication impacted SLAs (cashless approvals in 30 mins dropped to 76% from 90%) and required higher reserving, showing a vulnerability in a core process.

    Management acknowledged

  • Increasing Loss Ratio

    medium

    The IFRS loss ratio increased YoY for both retail (66% to 68%) and group (58% to 61%). While explained by one-off reserving and mix, it remains a key trend to monitor.

    Both acknowledged

Areas of evasion (1)

  • While not evasive, the explanation for the loss ratio increase was complex and required multiple rounds of questioning to become clear.

Q&A highlights

2 direct
Explanation for the sharp increase in Loss Ratio Partial
So this 2% increase, around 50 basis points would be change in mix, new renewal, and balance would be because of this increase in reserve, strengthening of reserve... Yes, correct, 1.5%.

This was the most critical issue of the call, requiring multiple analyst questions to clarify that the spike was due to a temporary operational issue (1.5% impact) and mix changes, not a fundamental deterioration in claims experience.

Asked by Prayesh Jain, Shobhit Sharma, Ritika

Strategy on long-term (multi-year) policies Direct
strategically, we are moving down our multiyear policy. It was in the late 20s earlier. Now this year, it is in the early 20s.

Revealed a significant strategic shift to reduce exposure to multi-year policies, which contrasts with some competitors and impacts GWP mix, growth, and accounting complexity.

Asked by Shobhit Sharma

Claim rejection rates relative to industry peers Direct
Broadly with retail books, at least our experience is, depending on the maturity, anything from 92%, 93%, 94% is what we have seen. We'll have to examine what is it that the others are doing to see if there's any area for improvement for us.

Highlights a potential competitive disadvantage, as Niva Bupa's ~7% rejection rate is higher than some peers (<5%). Management attributes this to their retail-heavy mix but acknowledges a need to review.

Asked by Shreya Shivani

3 min read 6 chapters

Detailed narrative

Top-line Growth Remains Robust Despite Accounting Headwinds

Niva Bupa reported strong underlying business momentum with a like-for-like Gross Written Premium (GWP) growth of 28% in Q1 FY26. The growth was spearheaded by the retail health segment, which grew by 32%. However, management repeatedly cautioned that the reported Indian GAAP financials are 'distorted' due to the new 1/n accounting rule for multi-year policies and that this 'noise' is expected to continue for 2-3 years. They strongly urged analysts to focus on the IFRS financials, which they believe provide a truer picture of the company's performance.

IFRS Profitability Doubles, But Loss Ratio Ticks Up

On an IFRS basis, Profit After Tax (PAT) nearly doubled to ₹70 crores from ₹36 crores in the same quarter last year. The IFRS combined ratio saw a modest improvement of 70 basis points to 103.2%, primarily driven by better expense management. Despite this, the underlying IFRS loss ratio increased year-over-year, with the retail loss ratio moving to 68% from 66% and the group loss ratio increasing to 61% from 58%, a trend attributed to higher reserving and a change in business mix.

Claims Auto-Adjudication Halt Pressures SLAs and Reserves

A significant operational issue occurred in Q1, where the company had to suspend its claims auto-adjudication service due to information security reviews with third parties. This directly impacted service levels, with the rate of cashless approvals within 30 minutes falling from a typical 90% to 76%. The suspension also led to a buildup in outstanding claims, compelling the company to prudently increase its reserves, which management quantified as having a 1.5% to 2% adverse impact on the quarter's loss ratio. The service was reportedly restored in July 2025.

Market Share Gains and Strategic Shift Away from Multi-Year Policies

The company continued to gain traction in its core segment, with retail market share inching up to 10% from 9.9% a year ago. In a notable strategic disclosure, management revealed they are actively reducing the share of multi-year policies in their business mix, from the 'late 20s' percentage-wise down to the 'early 20s'. This move could help reduce accounting volatility but may impact GWP growth. To manage profitability, the company also executed a 7% price hike on its flagship product, ReAssure 2.0, during the quarter.

Operating Leverage Drives EOM Ratio Improvement

Niva Bupa demonstrated strong cost control and operating leverage in the quarter. The Expense of Management (EOM) ratio improved significantly to 35.9% from 40.7% in Q1 FY25. Management attributed this to GWP growing 28% while operating expenses grew only in the low-single digits. The company's financial stability remains strong, with a healthy solvency ratio of 2.86x, comfortably above the regulatory requirement of 1.50x.

Health App Metrics Show Strong Customer Engagement

Reinforcing its strategy to be a 'health partner', Niva Bupa highlighted strong engagement on its digital platform. The health app has reached 12.3 million downloads with 5.7 lakh monthly active users. The platform facilitates over 50,000 health checkups and 6,000 doctor consultations monthly. In Q1, the company launched a new chronic condition management program on the app, aiming to proactively manage lifestyle diseases and bend the long-term cost curve on claims.

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