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    Star Health Insu

    STARHEALTHGood
    Financial Services·29 Oct 2025
    Management Summary

    Star Health delivered a robust H1 FY26 performance characterized by a strategic shift toward the high-margin retail segment (95% of book) and a successful exit from unprofitable group portfolios. While Q2 profitability was dampened by non-cash MTM losses on the investment book, core underwriting metrics showed marked improvement, with the combined ratio nearing break-even. Management is aggressively mitigating GST-related input tax credit losses by restructuring intermediary commissions and leveraging pharmacy cost savings.

    Highlights

    8

    • H1 FY26 Gross Written Premium (GWP) reached ₹8,809 crore, a 12% YoY growth.

    • Retail Health GWP grew 17% YoY to ₹8,332 crore, now contributing 95% of the total book.

    • H1 FY26 PAT stood at ₹518 crore, up 21% YoY; however, Q2 PAT was impacted by a ₹122 crore pre-tax MTM loss.

    • Combined Ratio improved to 100.3% in H1 FY26 from 102.1% in H1 FY25.

    • Net Incurred Claim Ratio for Q2 FY26 improved to 71.8% vs 73.7% in Q2 FY25.

    • Expense Ratio improved significantly to 29.7% in H1 FY26 from 31.1% in the previous year.

    • Digital channel is the fastest-growing vertical at 47% fresh premium growth, contributing 20% of fresh business.

    • Solvency ratio remains strong at 2.15x, well above the regulatory requirement.

    Concerns

    1

    • Investment Book Volatility (MTM Losses)

    Key financials

    Metrics

    6

    Periods

    3

    Headline

    1
    • Solvency Ratio
      2.15 x

    Q2

    1
    • Net Incurred Claim Ratio
      71.8%
      YoY-2.6%

    H1

    4
    • Gross Written Premium
      ₹8,809 Cr
      YoY+12%
    • PAT
      ₹518 Cr
      YoY+21%
    • Combined Ratio
      100.3%
      YoY-1.8%
    • Expense Ratio
      29.7%
      YoY-4.5%

    Segment breakdown

    Retail Health
    ₹8,332 Cr GWP17% Growth69.9% Loss Ratio (H1)
    Group Portfolio
    5% Contribution to Book82.1% Loss Ratio (H1)
    List

    Guidance & targets

    3
    CategoryTargetPriority
    Profitability
    Combined Ratio
    Gradual improvement
    		Medium
    Other
    Intermediary Commission Structure
    Inclusive of GST
    		High
    Other
    Senior Citizen Repricing
    10%
    		High

    Risks & concerns

    5
    RiskSeverity

    Investment Book Volatility (MTM Losses)

    Q2 PAT was significantly impacted by a pre-tax MTM loss of ₹122 crore due to interest rate/equity movements. — Management acknowledged

    high

    Medical Inflation

    Requires consistent annual price increases to maintain margins; management plans annual repricing cycles. — Both acknowledged

    medium

    GST Input Tax Credit (ITC) Non-availability

    The exemption of GST on retail health policies removes the ability to claim ITC, creating a cost headwind that must be offset by commission cuts. — Analyst acknowledged

    medium

    Areas of Evasion(2)

    • Specific retail health NEP growth numbers (stated as not in public domain)
    • Specific long-term policy count for the previous year (offered to provide offline)

    Q&A highlights

    3

    “September was a month where almost half the month business was almost zero... all your NOP numbers all came down to zero... But as we speak about October, we are seeing very robust growth both on NOP and value.”

    Explains that the low volume growth was a temporary distortion due to a specific month's performance, while value growth remains strong due to long-term policies.

    asked by Sanketh Godha, Avendus Spark

    2 min read5 chapters

    Detailed Narrative

    01

    Portfolio Recalibration Drives Margin Expansion

    Star Health has successfully pivoted its business mix, with the retail segment now accounting for 95% of the total book, up from 91% last year. The company has fully exited unprofitable group employer-employee portfolios and repriced the high-claims Banca Group book. This recalibration resulted in a 190 basis point decrease in the net incurred claim ratio for Q2 FY26 compared to the previous quarter, standing at 71.8%.

    02

    GST Reform: A Double-Edged Sword

    The government's exemption of GST on retail health indemnity policies is viewed as a major demand catalyst, with fresh business in October already showing nearly 50% growth. However, the loss of Input Tax Credit (ITC) creates a cost pressure. Management is mitigating this by making intermediary commissions inclusive of GST starting October 1, 2025, which they estimate will offset the ITC loss without impacting the P&L.

    03

    Digital and Agency Channel Dynamics

    The agency vertical remains the backbone of the business, contributing 83% of total GWP and growing at 16% YoY with a base of 8 lakh agents. Simultaneously, the digital channel has emerged as the fastest-growing vertical, with 47% fresh premium growth and a 20% contribution to overall fresh business. The company's proprietary mobile app has reached 12 million downloads, now generating 9% of retail new policies (NOPs).

    04

    Underwriting Discipline and Fraud Detection

    Management highlighted the role of in-house AI/ML technology platforms in improving claim settlement ratios to 90% while simultaneously reducing fraud. These proprietary fraud detection models delivered a 35% growth in savings over the last year. Additionally, the company has implemented price corrections in 65% of its retail book over the past year to combat medical inflation.

    05

    Investment Performance and MTM Impact

    The investment book yielded 8.3% in H1 FY26, supported by an 18% allocation to equity, ETFs, REITs, and InvITs. However, Q2 FY26 PAT was restricted to ₹79 crore due to a significant MTM loss of ₹122 crore (pre-tax). Management remains committed to a long-term asset management philosophy, viewing these quarterly fluctuations as non-core to the underwriting business.

    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.