Star Health and Allied Insurance company –
Q1 concall and results highlights –
Company has a whopping 31 pc mkt share in retail Health Insurance space in India. Its a fast growing, under-penetrated industry
Distribution strength – 7.2 lakh agents, 887 branches
15 pc of company’s premium is collected via specialised policies. These specialised policies include –
Star cancer care
Star senior citizens
Star cardiac care
Young star
Women care
Star Diabetes safe
Q1 FY 25 financial outcomes –
GWP – 3475 vs 2948 cr, up 18 pc
GWP from Retail Health + Personal accident + Travel Insurance @ 3100 cr, from Group health insurance @ 375 cr vs 2700 cr and 248 cr respectively
Combined ratio – 99.2 vs 97.8 pc
Underwriting profit – 140 vs 145 cr
Investment income – 295 vs 145 cr ( investment yield @ 7.5 vs 7.4 pc )
PAT – 318 vs 287 cr, up 11 pc
Investment portfolio @ 15,800 vs 13,300 cr ( investment leverage @ 7.5 pc )
Breakdown of combined ratio –
Claims ratio + Expense ratio = 31.6 pc + 67.6 pc = 99.2 pc in Q1 FY 25 vs 32.4 pc + 65.4 pc = 97.8 pc in Q1 FY 24
Channel wise premium collections –
Individual agents – 80 pc
Bancassurance – 8 pc ( this channel grew 25 pc YoY )
Digital – 7 pc ( digital channel also grew by 25 pc YoY )
Corporate – 5 pc
Company’s last 5 yrs CAGR in GWPs and underwriting profits stand @ 23 and 24 pc respectively
Company added 17k agents in June Qtr
Company has tie-ups with 61 banks and NBFCs for selling their products
Company’s digital channel consists of own direct to consumer and online brokers + web aggregators
Company aims to hit a GWP ( full year ) of 30k cr and PAT of 2500 cr by FY 28 ( FY 24 GWP, PAT were 15.2k cr, 845 cr
Ratio of fresh : renewal business improved to 25:75 vs 23:77 in Q1 LY
Company expects the share of business coming from BACASSURANCE channel to grow in future – as its a high growth channel
Company has 887 branches – touching 19000 PIN CODES in India. Company has a sharp focus towards rural and semi-urban areas
In Q1, 90 pc of claims were cashless vs 84 pc in June LY
Company’s solvency ratio stands @ 2.3 vs a regulatory requirement of 1.5
Star Health App downloads stand at 66 vs 57 lakh YoY
Inflation of bills by hospitals / Over charging is an industry wide problem. However, company is upto the task and they are extremely vigilant about these malpractices. Company also keeps educating its customers about the treatment options available in various areas / cities / towns and try and divert customers away from hospitals that have a tendency to over-charge
Company also invests a lot a wellness awareness and preventive checkups – for its customers to keep them healthier which helps in the long run – obviously
General Insurers council of India ( representing the General Insurance industry ) has started making efforts to bring various Insurers on board and negotiate better deals with Hospitals. The whole thing is in nascent stages. Likely to fructify in medium term
Company’s investment book comprises of roughly 12:88 in terms of Equity:Fixed rate investments
Company’s retail business grew by 15.5 pc – that comprises of 7.5 pc volume growth and 8 pc value growth ( price hikes )
The management believes they have a deep customer connect and trust. This should help them cross-sell other protection plans like Life Insurance, Term Insurance etc. They are open to acquiring a composite Insurance license. Have also appointed BCG to study and identify potential profit pools for the company
Company’s loss ratio is higher by 2.2 pc vs Q1 FY 24. This has been an industry wide phenomenon in Q1. The fever + Infections season did start a little early in Q1. Hence the company expects it to end also a little earlier in Q2 – bringing down the loss ratio in Q2 ( let’s see if that happens !!! )
10 pc of company’s GWP in Q1 has come from porting-in. ( ie porting customers from other companies to their company ). Company is keen to go aggressively towards in-porting – in areas where they feel that loss ratios are expected to be within manageable limits
Company plans to take a price hike ( of about 10-15 pc )on 30 pc of its product portfolio in current FY. On the total portfolio level, this should work out to be a hike of around 4-5 pc
Disc : not holding, analysing, may initiate a tracking position if the stock price falls steeply post the customer data hack news, not SEBI registered, not a buy/sell recommendation, posted only for info purposes
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