Skip to content

    Star Health Insu

    STARHEALTHGood
    Financial Services·30 Jul 2025
    Management Summary

    Star Health delivered a strong start to FY26 with significant growth in retail premiums and a substantial jump in IFRS-based profitability. The company is successfully pivoting towards a digital-first strategy and higher-value products like 'Super Star', while consciously exiting unviable large corporate segments. Despite industry-wide medical inflation pressures on claim ratios, management remains focused on risk-based pricing and long-term ROE targets.

    Highlights

    8

    • IFRS PAT stood at ₹438 crores, a 44% YoY increase compared to ₹304 crores in Q1 FY25

    • Gross Written Premium (GWP) reached ₹3,936 crores, representing 13% YoY growth

    • Retail Health GWP grew 18% YoY to ₹3,667 crores, maintaining a 31% market share

    • Fresh retail premiums saw a robust growth of 25% on an N basis

    • Digital business now contributes 20% of new business, with fresh digital business growing at 73%

    • Combined ratio for the quarter was 99.6% compared to 99.2% in the previous year

    • Net incurred claim ratio stood at 69.5% for Q1 FY26

    • Solvency ratio remains strong at 2.22x, well above the 1.5x regulatory requirement

    Concerns

    1

    • Medical Inflation and Claims Escalation

    What Changed1

    vs Q2 FY26

    Guidance items3 → 4 (+1)

    Key financials

    Single quarter

    06 metrics
    1. 01Gross Written Premium₹3,936 Cr+13%YoY
    2. 02IFRS PAT₹438 Cr+44%YoY
    3. 03Claims Ratio69.5%+2%YoY
    4. 04Combined Ratio99.6%+0.4%YoY
    5. 05Investment Income₹586 Cr+51%YoY

    Segment breakdown

    Retail Health
    ₹3,667 Cr GWP18% GWP Growth68.5% Loss Ratio25% Fresh Premium Growth
    Bancassurance
    7% GWP Contribution92% Preferred Product Mix
    Corporate Business
    2% GWP Contribution65% SME Segment Mix85.1% Group Loss Ratio
    List

    Guidance & targets

    4
    CategoryTargetPriority
    Profitability
    IFRS PAT
    ₹2,500 crores
    		High
    Revenue
    Overall GWP
    Moderated from ₹30,000 crores
    		Medium
    Market Share
    Retail Health Market Share
    31%
    		High
    Other
    Digital SBU Creation
    1
    		High

    Risks & concerns

    6
    RiskSeverity

    Medical Inflation and Claims Escalation

    The industry is witnessing very high healthcare cost escalation, leading to elevated claim ratios across players. — Both acknowledged

    high

    Investment Yield Decline

    Investment yields have declined by ~100 bps YoY, potentially impacting the 80% contribution target for future PAT. — Analyst acknowledged

    medium

    Concentration in MTM Gains

    A significant portion of IFRS profit is driven by mark-to-market gains on the equity portfolio, which may not be sustainable. — Analyst deflected

    medium

    Areas of Evasion(3)

    • Specific commission payout structures for long-term products
    • Granular cohort-level loss ratios for fresh vs renewal business
    • Absolute numbers for fresh vs renewal retail premiums

    Q&A highlights

    3

    “If I exclude mark-to-market, it has declined by 31%... pain point seems to be claims... Nilesh Kambli: You cannot completely exclude the MTM gains... there is a good improvement in the IFRS results like-to-like compared to last year.”

    Analysts are concerned that the headline profit growth is driven by volatile investment gains rather than core underwriting improvements.

    asked by Sanketh Godha, Avendus Spark

    2 min read5 chapters

    Detailed Narrative

    01

    Retail Dominance and Market Share Stability

    Star Health continues to dominate the retail health insurance market with a 31% market share. Retail GWP grew 18% YoY to ₹3,667 crores, now contributing 94% of the total portfolio compared to 90% last year. This growth was fueled by a 25% surge in fresh retail premiums and a strong renewal persistency of 98% on a value basis.

    02

    Strategic Pivot Away from Large Corporates

    The company is executing a deliberate strategy to exit large corporate and co-insurance segments that were deemed unviable. Corporate business now contributes only 2% of the mix, with 65% of that coming from the more profitable SME segment. This shift is expected to moderate the long-term GWP target of ₹30,000 crores but improve overall underwriting margins.

    03

    Digital Acceleration and Efficiency Gains

    Digital channels are becoming a primary growth engine, now accounting for 20% of new business. Fresh digital business grew by 73% YoY, supported by a 75% increase in brand search volumes. Management plans to create a dedicated Digital SBU to further accelerate this momentum, noting that digital growth is being achieved with higher manpower efficiency.

    04

    IFRS Transition and Profitability Quality

    Under IFRS reporting, PAT jumped 44% to ₹438 crores, though analysts noted that ₹292 crores of investment income came from MTM gains. Management defended the quality of earnings, highlighting a 100 bps reduction in the IFRS expense ratio to 30.1%. They reaffirmed their FY28 PAT target of ₹2,500 crores, expecting a 20/80 split between underwriting and investment returns.

    05

    Claims Environment and Pricing Actions

    The net incurred claim ratio rose slightly to 69.5% due to persistent medical inflation. In response, Star Health has implemented pricing corrections on 65% of its book in the last fiscal year and is moving toward an annual repricing strategy. Fraud, Waste, and Abuse (FWA) savings improved by 30% YoY, helping to mitigate some of the inflationary pressure.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.