Revenue
Margin
Demand
Guidance
Tone
Metrics cut 1
- FY27 reinsurance expense ratio guided to 0.5-0.6% (from ~0.9% in FY26)
Event Participants
Executives
6 Amitabh Jain, Anand Roy, Aneesh Srivastava, Himanshu Walia, Nilesh Kambli, Soumyajit Bhattacharya
Analysts
9 Ansuman (ICICI Securities), Avinash Singh, Nitesh Jain, Prayesh Jain, Samaan Singh, Sanketh Godha, Shreya Shivani, Supratim Datta, Swarnabh Mukherjee
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| GWP - reported (1/N basis) | ₹4,287 crore | +19% YoY; reported per regulator's 1/N methodology |
| GWP - normalised (N basis) | ₹4,672 crore | +19% YoY; disclosed alongside 1/N basis for transparency |
| Fresh retail health GWP (1/N) | ₹730 crore | +37% YoY; ₹1,039 crore on N basis (+35% YoY); new-to-insurance mix at 94% vs 90% in Q1 FY26 |
| Insurance revenue growth | 13.4% YoY | Lags GWP growth due to ~40% long-term policy mix that recognizes revenue over 2-3 years; expected to accelerate to 15-16% |
| Retail market share | 29% | vs 31% in Q1 FY26; impacted by long-term policy reporting implications and deliberate avoidance of riskier pools; like-for-like comparability by FY28 |
| Agency network | 8.5 lakh agents | +20,000 agents added in the quarter; agent productivity +19% YoY |
| B2C fresh business | +142% YoY | 98% of customers new to insurance; 74% of digital fresh business originates from own B2C platform |
| CISR | 97% | Improved 1.7 ppts from 98.7% in Q1 FY26 |
| Underwriting result | ₹111 crore | vs ₹16 crore in Q1 FY26; fourth successive quarter of improvement |
| Retail loss ratio | ~67.5-68% | Management confirmed range in Q&A; group loss ratio drove the majority of YoY improvement |
| Retail claim settlement ratio | 91% | +1 ppt YoY; 9.5 lakh+ claims settled in the quarter, 80%+ cashless |
| Renewal ratio | 102% | +3 ppts YoY |
| PAT (reported) | ₹550 crore | +25% YoY; includes short-term mark-to-market volatility |
| Normalized PAT | ₹386 crore | +44% YoY, pegged at normalized annual investment yield of 8%; annualized ROE improved to 15.6% vs 12.2% in Q1 FY26 |
| Investment income | ₹634 crore | +10% YoY |
| NPS | 65 | +12 points YoY at June 2026 |
Geographic & Segment Commentary
- Retail Health: Largest retail health insurer in India with 29% market share; fresh retail GWP at ₹730 crore (+37% YoY) driven by disciplined focus on preferred segments and younger cohorts (senior citizens under 5% of book). Long-term policies account for ~40% of retail fresh business. Fresh business growth from non-metro geographies is 3.5x that of metro, reflecting deepening penetration.
- Group & Corporate: Group business now only ~2.5% of GWP vs ~5% in Q1 FY26; majority of the YoY loss ratio improvement came from the group segment, while retail also improved marginally. SME business through agency remains the stated priority within corporate groups.
- Distribution & Channels: Proprietary channels (agency + digital D2C) contribute 90%+ of retail business, providing control over customer selection and acquisition economics. Agency at 8.5 lakh agents with 19% productivity growth; B2C is the fastest-growing profitable channel at +142% YoY.
- Digital & Technology: 97% of new applications now digitally sourced; customer app scaled to ~16 million downloads and 1.5 million+ monthly active users; ATOM Pro distribution app won ET BFSI FinNext Award 2026. Generative AI being layered over existing AI/ML for fraud, waste and abuse mitigation.
Company-Specific & Strategic Commentary
- 20-Year Milestone: Completed two decades of service on 18 May 2026, helping 2.8 crore+ lives; 19,000+ employees make it the largest employer in the general insurance space including public sector companies.
- Underwriting Turnaround: The 18-month course correction that delivered a ₹350 crore upswing in FY26 underwriting profit is being sustained - Q1 FY27 underwriting result of ₹111 crore vs ₹16 crore in Q1 FY26.
- Wellness Ecosystem: Home healthcare and telemedicine capabilities scaled significantly - ~50,000 teleconsultations this quarter vs ~9,000 in Q1 FY26 - improving efficiency of fever/infection case management ahead of the Q2 vector-borne disease season.
- Reinsurance Optimization: The three-year voluntary total treaty (FY24-FY25) impact is fading out; management is negotiating obligatory treaty benefits with GIC Re, expecting reinsurance expense to decline further during the year.
- Regulatory Positioning: Star Health is already operating within expense of management limits set by the regulator; with 90% proprietary distribution, management believes it is advantageously placed for any commission or claim reforms.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Insurance revenue growth | ~15-16% in FY27, increasing in FY28 | Long-term policy revenue recognition gradually converges with GWP growth as the year progresses |
| Expense ratio | 30-40 bps improvement annually | Driven by technology/digitization investments and productivity gains; FY27 has a one-off GST input credit impact in other expenses |
| Reinsurance expense ratio | 0.5-0.6% for FY27 vs ~0.9% in FY26 | Voluntary treaty fade benefits plus GIC Re obligatory negotiation |
| ROE | Mid-to-high teens glide path | Normalized PAT framework (8% investment yield) shows 15.6% annualized ROE for Q1 FY27; structurally improving over 3-4 quarters |
| Growth | H2 FY27 optically moderated | GST waiver created a high base in H2 FY26; long-term policies partially offset; management will not chase growth at the cost of profitability |
| Q2 FY27 loss ratio | Seasonally higher expected | Dengue, malaria, fever outbreaks typically elevate claims; telemedicine and home healthcare on hand to support |
| Market share comparability | Restored by FY2028 | N and 1/N reporting implications of long-term policies will normalize |
Risks & Constraints
| Risk | Context |
|---|---|
| Q2 seasonal claims | Vector-borne disease season (dengue, malaria, fever) typically raises loss ratios in Q2; management is watchful and deploying telemedicine/home healthcare to mitigate severity, but claim volumes are expected to rise. |
| H2 growth moderation | GST waiver created an elevated base in H2 FY26; growth rates will optically moderate for the industry and Star Health, though management expects fresh business share to sustain through long-term policy mix. |
| Regulatory reform uncertainty | Proposed commission and claim reforms pending; management declined to comment on specifics but noted Star Health already operates within EoM limits and its 90% proprietary channel share is an advantage. Final rules could still alter acquisition cost economics. |
| Market share decline | Retail share fell from 31% to 29% YoY; partly reporting-related due to long-term policies and partly a deliberate strategy of avoiding riskier pools. Like-for-like comparability will only be restored by FY28. |
| Back book loss ratio | Despite strong fresh growth, favorable channel mix and repricing, overall loss ratio improved only ~100 bps YoY; management acknowledged the legacy book is a continuous work-in-progress rather than a completed turnaround. |
Q&A Highlights
Insurance Revenue vs GWP Convergence
- Question: Insurance revenue growth was 13.4% vs GWP growth of 19% - when will the two converge? (Supratim Datta, Jefferies)
- Answer: The gap is driven by long-term policy revenue recognition; insurance revenue growth should gradually touch 15-16% as quarters progress and increase further in FY28. (Management)
Loss Ratio Levers & Telemedicine Scale-up
- Question: What are the remaining levers for loss ratio improvement, and how many claims flow through telemedicine? (Supratim Datta, Jefferies)
- Answer: A 360-degree approach combining portfolio quality, pricing, claims network management, fraud, waste and abuse control, and wellness; teleconsultations scaled to ~50,000 this quarter vs ~9,000 a year ago, with the telemedicine impact more visible in Q1 infectious disease claims. (Management)
Expense Ratio Outlook
- Question: Is the ~100 bps two-year expense ratio improvement sustainable? (Supratim Datta, Jefferies)
- Answer: Management clarified the 30-40 bps annual improvement refers to the expense ratio, not the loss ratio; it will be driven by technology investments and productivity, and no loss ratio guidance is being provided. (Nilesh Kambli)
Post-GST Fresh Growth & Pricing Strategy
- Question: How will fresh premium growth trend once the GST base effect normalizes, and is pricing adequate? (Avinash Singh, Emkay)
- Answer: Growth rates will optically moderate for everyone including Star Health; pricing remains an annual, actuarially justified exercise product-by-product, with non-claimant discounts being introduced; Q2 is seasonally a higher loss ratio quarter. (Anand Roy)
Loss Ratio Decomposition & ROE Target
- Question: Which lever contributed most to loss ratio improvement, and what is steady-state ROE? (Swarnabh Mukherjee, 360 ONE Capital)
- Answer: Repricing, portfolio selection, claims governance, FWA control, and wellness/telemedicine all contributed without any single dominant driver; the normalized ROE glide path targets mid-to-high teens over time rather than a specific near-term number. (Anand Roy)
Reinsurance Expense & Pricing Calendar
- Question: What is the steady-state reinsurance expense, and when does repricing happen? (Shreya Shivani, Nomura)
- Answer: The voluntary total treaty benefit is fading, the GIC Re obligatory negotiation should help further, and reinsurance expense should settle at 0.5-0.6%; most product repricing actions over the last two years were taken in Q4. (Anand Roy)
Acquisition Cost & Employee Allocation
- Question: Is the entire employee expense allocated to acquisition cost? (Nitesh Jain, Investec)
- Answer: No - claims-related employee costs sit in claims, sales-related staff in acquisition cost, and support services in other expenses, in line with IND-AS presentation. (Nilesh Kambli)
Retail vs Group Loss Ratio Split
- Question: Can you split loss ratio between retail and group, given group contribution has halved? (Sanketh Godha, Avendus Spark)
- Answer: Retail loss ratio is closer to 67.5-68%; group is now only ~2.5% of GWP, and the majority of the YoY improvement came from group, though retail also improved. (Nilesh Kambli)
Regulatory Reforms & Proprietary Advantage
- Question: How will proposed commission and claim reforms impact Star Health? (Ansuman, ICICI Securities)
- Answer: Management will not comment on proposed regulations; with 90% business from proprietary channels and operations already within EoM limits, Star Health believes it is advantageously positioned for any reform outcome. (Anand Roy)
Back Book Quality & H2 Growth Base Effects
- Question: Given favorable fresh mix and digital growth, does ~100 bps improvement imply the back book is deteriorating? Will H2 growth taper on the GST base? (Prayesh Jain, Motilal Oswal)
- Answer: Loss ratio trajectory is a continuous work-in-progress, not a destination; long-term policies will partially offset the GST base effect in H2, and the company will prioritize sustainable profitable growth over chasing volume. (Anand Roy)
Key Takeaway
Star Health delivered a robust Q1 FY27 with reported GWP (1/N) at ₹4,287 crore (+19% YoY) and fresh retail health GWP up 37% YoY to ₹730 crore, sustaining GST-waiver momentum with a 94% new-to-insurance mix while scaling non-metro growth to 3.5x metro. Underwriting profit rose to ₹111 crore from ₹16 crore - a fourth consecutive quarter of improvement - with CISR at 97% (-1.7 ppts YoY) and reported PAT of ₹550 crore (+25% YoY); normalized PAT grew 44% to ₹386 crore, taking annualized ROE to 15.6%. Strategy centers on deepening proprietary distribution (90%+ of retail; B2C fresh +142%; 8.5 lakh agents), data/AI-driven underwriting, and wellness-based claims management, with teleconsultations scaling to ~50,000 in the quarter. Management guides insurance revenue toward 15-16% growth, 30-40 bps annual expense ratio improvement, reinsurance expenses at 0.5-0.6%, and a mid-to-high teens ROE glide path, while flagging Q2 seasonality and H2 growth moderation from the GST base. Key watch points include back book loss ratio progress, pending regulatory reforms, and market share restoration by FY28.