No extraordinary spending planned this fiscal, says Niva Bupa; insurer eyes EoM reduction
3 min readAlthough Niva Bupa Health Insurance presently enjoys a 100 basis point cushion on its Expenses of Management (EOM) ratio, the insurer has no intention of markedly increasing expenditures this fiscal year, as it aims to lower the EOM, says Executive Director & Chief Finance Officer Vishwanath Mahendra. Speaking to businessline, Mahendra noted that raising equity capital is not on the agenda for FY 2025‑26. The firm can tap up to ₹500 crore in debt, if needed, in the second half of FY27 under the board‑approved framework. Excerpts:
Key Takeaways
- Niva Bupa Health Insurance has no plans for extraordinary spending this fiscal year, aiming instead to lower its Expenses of Management ratio.
- CFO Vishwanath Mahendra said equity capital raising is not on the agenda for FY2025-26.
- The insurer can tap up to Rs 500 crore in debt if needed in H2 FY27 under its board-approved framework.
- Niva Bupa’s retail health market share rose to 11.1% in Q1 FY2025-26, with plans to outpace industry growth by 8-9 percentage points annually.
Niva Bupa Health Insurance’s retail health market share rose to 11.1 % in Q1 FY‑2025‑26. What are your market‑share goals for the coming years?
Our aim is to outpace industry growth by 8‑9 percentage points annually, allowing steady market‑share gains. Continued distribution investment is crucial; we hired close to 1,000 salespeople last year and intend to onboard another 1,000 this year across agency, bancassurance, direct and third‑party channels.
What share of premium comes from bancassurance and agency channels, and do you anticipate the bancassurance contribution rising over the next two‑to‑three years?
Bancassurance accounts for roughly 19 % of premium, while the agency channel contributes about 32 %, making it the biggest distribution avenue.
We aim to maximise each channel’s potential. With over 20 bancassurance partners, we keep investing in this channel together with agency, direct and other models. Predicting exact shares is challenging as customer preferences shift; many now favor direct or digital purchases. Hence we stay channel‑agnostic, allocating resources across all avenues rather than fixing a specific mix.
The insurer’s solvency ratio is presently 2.25×, down from last year. What caused this decline?
A: The ratio stood at 2.86× a year earlier; the elevated level reflected the capital raised in our IPO to fund future growth. Today’s solvency remains robust and aligns with our growth trajectory.
Are there any plans to raise equity capital during FY 2025‑26?
No equity‑capital raise is planned for FY 2025‑26. Nevertheless, the board has authorised an enabling resolution permitting issuance of up to ₹500 crore in debt instruments—such as non‑convertible debentures—if required. The company can draw on this facility in the second half of the fiscal year under the approved framework.
Current outstanding debt is about ₹250 crore, giving a debt‑to‑equity ratio of roughly 0.07, which is quite low.
How is the company’s Expenses of Management (EOM) trending?
Expenses of Management stay well within regulatory limits. With the allowable ceiling at 36.2 %, our actual EOM is 35.2 %, leaving a cushion of roughly 100 basis points.
What is your EOM outlook for FY 2027, and do you intend to use the available 100‑basis‑point headroom?
We anticipate staying comfortably within the regulatory limit all year. There are no plans for a significant spending increase. Adding roughly 1,000 staff is modest compared with our workforce of over 10,000, so we do not foresee the EOM approaching the ceiling.
Do you expect the EOM to decline further over time?
Yes. Continuous optimisation is our priority. As the business expands, operating leverage improves naturally. This quarter premium rose 32 % and retail 47 %, while expenses grew at a far slower rate. Moreover, our technology, analytics and AI investments boost efficiency, which should keep driving the expense ratio downward.
