Niva Bupa Health Insurance Company Limited — Q4 FY25 earnings call

Call held 7 May 2025

Management summary

Niva Bupa Health reported a strong performance for FY25, marked by robust 32% GWP growth on a comparable basis and a 91% surge in IFRS PAT. The company demonstrated significant operational leverage, with its like-to-like combined ratio improving by 270 basis points to 96.1%, driven by enhancements in both loss and expense ratios. Management highlighted strategic progress in expanding its distribution network, launching new products like 'Rise' for the mass market, and effectively managing claim inflation at 5%, which is below general industry perceptions. The company maintains a strong capital position with a solvency ratio of 3.03x.

Highlights

  • Gross Written Premium (GWP) grew 32% YoY on a like-to-like basis to ₹7,406 crores.

  • Full-year IFRS Profit After Tax (PAT) surged 91% YoY to ₹203.3 crores from ₹106 crores in FY24.

  • Full-year iGAAP PAT grew 161% YoY to ₹214 crores.

  • Like-to-like Combined Ratio improved by 270 bps to 96.1% in FY25.

  • Reported Combined Ratio stood at 101.2% due to the '1/N' accounting change impact.

  • Solvency Ratio remains robust at 3.03x, well above the regulatory minimum of 1.50x.

  • Assets Under Management (AUM) reached ₹8,175 crores with an investment yield of 7.4%.

  • Retail market share increased to 9.4% in FY25 from 9.1% in FY24.

Concerns

  • Induced Demand from Healthcare Providers

Key financials

  1. GWP (Like-to-like) ₹7,406 Cr +32%YoY
  2. PAT (IFRS) ₹203.3 Cr +91%YoY
  3. Combined Ratio (Like-to-like) 96.1%
  4. Combined Ratio (Reported) 101.2%
  5. Solvency Ratio 3.03×
  6. AUM ₹8,175 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

  • Retail
    65.5% Share of GWP66% Loss Ratio (IFRS)
  • Group
    58.2% Loss Ratio (IFRS)

Guidance & targets

Expense

  • Expense of Management Ratio Expense · FY26 · High confidence Meet regulatory allowable expense ratio of 35.5%
    So we are again around 190 basis points away. So we are very confident that we will be able to achieve this in current financial year looking at the trajectory.

    — V Mahendra

Profitability

  • Renewal Book Loss Ratio Profitability · Ongoing · Medium confidence about 75%
    Prayesh, we can specifically answer that offline, but broadly, as we have indicated in the past, idea is to manage the overall renewal book to a loss ratio of about 75% and we are in that ballpark.

    — K Ramachandran

Risks & concerns

  • Induced Demand from Healthcare Providers

    high

    The structural risk of 'fraud, waste and abuse' in a third-party payer system was raised. Management acknowledged it as an ongoing problem to be managed but stated they do not see it 'going out of control'.

    Analyst acknowledged

  • Negative Industry Perception and News Flow

    medium

    Analysts highlighted negative press around claim rejections and hospital disputes. Management stated it's a 'problem of perception' and that underlying industry data on KPIs has actually improved.

    Analyst acknowledged

  • Volatility in Group Health Business

    medium

    The potential for volatile loss ratios in the employer-employee segment was noted. Management's mitigation strategy is disciplined pricing and maintaining a healthy mix of small and medium enterprises.

    Analyst acknowledged

  • Rapid Regulatory Changes

    medium

    Management mentioned in closing remarks that the industry faces rapid regulatory changes, which presents an ongoing challenge.

    Management acknowledged

Areas of evasion (2)

  • Long-term guidance for FY26/27
  • Specific data on fraud cases prevented

Q&A highlights

3 direct
Claim Inflation & Loss Ratio Breakdown Direct
In terms of medical inflation, 5% inflation, this is more or less in line with what we have been experiencing between 5% to 6%, 6.5% medical inflation year-on-year.

This question addressed the core profitability drivers, revealing specific loss ratios for retail (66%) and group (58.2%) and clarifying the company's claim inflation experience (5%) is lower than market fears, which they attribute to their data-driven provider management.

Asked by Supratim Datta

Expense of Management Glide Path & Industry Headwinds Direct
And if you just see FY25, let's say, what is the allowable expense ratio, so it is 35.5%... So we are again around 190 basis points away. So we are very confident that we will be able to achieve this in current financial year looking at the trajectory.

Management provided a confident and specific outlook on meeting the crucial regulatory expense ratio norm within the next fiscal year, a key compliance and profitability metric. They also acknowledged negative industry perception but countered it with data showing improved performance.

Asked by Prayesh Jain

Claim Incidence Rates & Long-term Book Maturity Direct
Look, structurally anywhere in the world, this is the problem to solve if you will in health insurance... any third-party payer system anywhere in the world suffers from this incentive of fraud, waste and abuse, let me call it that. But that's the problem to solve and it is an ongoing problem... No, we don't see that going out of control.

This question probed the long-term risk of rising claims as the customer base ages. Management acknowledged the structural risk of induced demand from healthcare providers but expressed confidence in their levers (risk selection, pricing, claims management) to manage it and prevent it from getting 'out of control'.

Asked by Akshay J

2 min read 6 chapters

Detailed narrative

Strong Growth and Profitability Momentum

Niva Bupa demonstrated robust financial performance in FY25, reporting a 32% YoY growth in Gross Written Premium (GWP) to ₹7,406 crores on a like-to-like basis. This growth was broad-based across retail and group segments. Profitability saw a significant uplift, with IFRS Profit After Tax (PAT) growing 91% to ₹203.3 crores. The company's retail market share also expanded from 9.1% in FY24 to 9.4% in FY25, indicating market outperformance.

Core Underwriting Discipline Drives Margin Improvement

Despite a reported combined ratio of 101.2% due to the '1/N' accounting change, the company's underlying performance was strong. On a comparable basis, the combined ratio improved by a significant 270 basis points to 96.1%. This was driven by a 190 bps improvement in the expense ratio (to 37.4%) and an 80 bps improvement in the loss ratio. Management expressed high confidence in meeting the regulatory expense of management norm of 35.5% in FY26.

Effective Management of Claim Inflation

A key theme was the management of medical inflation. The company reported that its average claim size grew by 5% in FY25, a figure notably lower than the double-digit inflation perceived in the industry. Management attributed this to a data-driven strategy for provider management, including targeted negotiations with its Preferred Provider Network (PPN) of nearly 600 hospitals, analytics-driven billing reviews, and proactive case management to ensure appropriate treatment protocols and duration of stay.

Strategic Initiatives: New Products and Digital Adoption

The company continues to focus on strategic initiatives to drive future growth. During the last quarter, it launched a new product called 'Rise', targeting the 'Missing Middle'—the large, underserved middle and lower-middle-class population. On the technology front, Niva Bupa is seeing results from its digital focus, with the auto-adjudication rate on claims improving to 28.5% on a full-year basis. Customer engagement through its app remains high, with over 11 million downloads and more than half a million monthly active users.

Segment Performance and Business Mix

The business mix for FY25 comprised 65.5% from retail and the balance from group, PA, and travel. The group business share increased slightly due to the acquisition of two large corporate accounts. The IFRS loss ratio for the retail segment was 66%, a 100 bps increase from FY24, while the group loss ratio stood at 58.2%, a 50 bps increase. The company's multi-year policy proportion is around 20% of the retail book.

Robust Capital and Investment Position

Niva Bupa maintains a strong balance sheet with a healthy solvency ratio of 3.03x, more than double the regulatory requirement of 1.50x. Assets Under Management (AUM) grew to ₹8,175 crores, generating an investment yield of 7.4% for the year. The investment portfolio is conservative, with management confirming that it is almost entirely composed of debt instruments.

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