Max India-BUPA Fin JV to set up health insu co

Analjit Singh, Managing Director, Max India, said BUPA is not coming in at a premium because it is sort of a start-up greenfield joint venture.

Excerpts from CNBC-TV18's exclusive interview with Analjit Singh:

Q: This is a 74:26 joint venture, as the law will permit. But is BUPA coming in at a premium?

A: They are not coming in at a premium because it is sort of a start-up greenfield joint venture. They will come in at par with an initial capital of Rs 100 crore, which is stipulated as entry into this sector. It is a standalone health insurance joint venture with BUPA.

Q: How do you see the business growing? Have you laid down any targets? What kind of growth targets are you looking at for the next 2-3 years?

A: We see it as a virgin market. The market has not seen any product, technology, or distribution innovation. So far health insurance is restricted to only in-patient needs. In that, there are only vanilla products available to cater to those needs.

So, when we look at the variation and diversity in the Indian market and what we can do for in-patient and outpatient needs, progressing to even prevention and wellness, which is where BUPA’s strengths lie, I think it is really the sky is the limit kind of thing.

It is important to emphasize that much like New York Life has the largest share of the ethnic Indian market in the US, BUPA has the largest share of the Indian ethnic market in the UK, Europe, and other Commonwealth countries, where it is a dominant or number one player.

So, we intend to capitalize on their long history, technological strengths that they have had, and market understanding. They are fourth in the health insurance and care space. In terms of synergy, it couldn’t be a better match between BUPA and Max.

Q: Would you expand this JV or bank on it since you already have a standing in the insurance business to offer BPO kind of services to other insurance companies or to the BUPA Group in their life insurance ventures?

A: It is a little early because right now we are going to be focused on getting the health insurance piece off the ground in India. We will file for approvals from the regulator in autumn. It will take us about a year to get the management team and all our tools and tackles up to speed.

Once we get the health insurance piece going, as other companies have done, it is something we will consider. But that is not on the cards right now. We are a very focused company and have stayed focused in the life insurance space. This will be a standalone operation focused on the health insurance space and we are committed to becoming a leader in this segment.

You have no idea what is the kinds of products, facilities, and advantages that we intend to bring through this JV. So, till we get that done, there is no point in talking about phase-II as of now.

Q: When do you see your life insurance business coming into the green?

A: From a YoY operations standpoint, we are already cash positive. The reason why it is not green is because our capex funding has increased. Our sum assured now is sitting over Rs 45,000 crore and we are adding 250 offices a year. Our current capital base in Max New York Life is Rs 1,250 crore. In the next 18 months, it will go up to Rs 2,500 crore.

So, one should appreciate the size of the aggressive expansion and footprint that we are doing in that business. We are the only life insurance company that still has 30% of its sales focused on long-term whole life endowment products and not single premium, market-linked, and unit-linked products.