Summary
Star Health and Allied Insurance Company Limited - Q3 FY2026 Earnings Call Summary Thursday, January 29, 2026
Event Participants
Executives 7 Aditya Biyani (Chief Strategy and IR Officer), Amitabh Jain (COO), Anand Roy (MD & CEO), Aneesh Srivastava (CIO), Himanshu Walia (CMO), Nilesh Kambli (CFO), Sombit Bhattacharyya (Head IR)
Analysts 8 Ansuman Deb (ICICI Securities), Avinash Singh (Emkay Global), Dipanjan Ghosh (Citigroup), Nidesh (Investec), Nischint Chawathe (Kotak), Prayesh Jain (Motilal Oswal), Raghvesh (JM Financial), Swarnabha Mukherjee (B&K Securities)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Gross Written Premium (GWP) | ₹5,047 crores | +23% YoY; Driven by 45% growth in fresh business and 17% in renewals. |
| PAT (IND AS) | ₹449 crores | +416% YoY from ₹87 crores; Driven by improved underwriting and investment yields. |
| Underwriting Profit (IND AS) | ₹46 crores | Improved from loss of ₹79 crores YoY; Aided by 320 bps improvement in combined ratio. |
| Combined Ratio | 98.9% | -320 bps YoY; Attributed to lower claims incidence and expense discipline. |
| Loss Ratio (Overall) | 68.8% | -301 bps YoY; Reflects targeted underwriting and pricing corrections. |
| Loss Ratio (Retail) | 68.4% | -103 bps YoY; Impact of price hikes taken in late FY25 starting to flow through. |
| Expense Ratio | 30.1% | -16 bps YoY; Continued focus on digital adoption and process efficiency. |
| Market Share (Retail Health) | 31.3% | Maintains leadership position in the retail health segment for 9M FY26. |
| Solvency Ratio | ~2.20x | Management indicated strong capital position supported by long-term policy upfronting. |
Geographic & Segment Commentary
- Retail Health Segment: Remains the core focus at 95% of business mix, growing significantly as the company passed on GST exemption benefits to customers. Retention is robust with a 99.2% value-wise persistency and a 31.3% market share.
- Rural & Semi-Urban Markets: Contributed 60% of fresh business, highlighting the strength of the granular agency distribution network in Tier-2 and Tier-3 cities.
- Corporate/Group Segment: Deliberately de-prioritized to 5% of total mix from 9% YoY; focus shifted to high-quality SME accounts, improving the group loss ratio from 94.6% to 83.5%.
Company-Specific & Strategic Commentary
- Long-Term Policy Push: Fresh GWP from long-term policies rose to 51% (vs 34% YoY), which management notes locks in customers at early stages and improves capital efficiency.
- Digital Transformation: 94% of new policies are now originated digitally, with the “ATOM” distributor app facilitating 85% of fresh acquisitions in Q3.
- Investment Strategy: Shifted 18.7% of the book to high-yielding assets (Equities, REITs, InvITs), achieving an investment yield of 9.6% for 9M FY26.
- Claims Management: AI-powered platforms now handle 57% of claims traffic, and the company settled 2 million claims worth ₹8,900 crores in 9M FY26 with a 90% settlement ratio.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Price Hikes | ~10% range for FY27 | Annual price cycle adjustments expected to offset medical inflation (~12-13%). |
| Return on Equity (ROE) | Mid-teens | Management targeting sustainable mid-teens ROE through a blend of loss ratio and expense control. |
| Asset Allocation | Equity capped at 15% | High-yielding assets aim to beat fixed income returns but are capped by internal risk models. |
Risks & Constraints
| Risk | Context |
|---|---|
| Medical Inflation | Expected to remain elevated at 12-13% in 2026; necessitates regular price hikes to maintain sustainability. |
| Regulatory Changes | Management is monitoring potential IRDAI reviews on Expenses of Management (EOM) and commission structures. |
| Investment Volatility | Under IND AS/IFRS, mark-to-market changes in the ₹3,000 crore equity book will create quarterly PAT volatility. |
Q&A Highlights
Loss Ratio Drivers
- Question: How much of the loss ratio improvement is due to fresh business growth vs. the renewal book? (Prayesh Jain)
- Answer: Price changes from late last year are clearly reducing the renewal loss ratio; fresh growth also helps, but its impact plays out over a longer period (Amitabh Jain).
Commission & Acquisition Costs
- Question: Why did the acquisition ratio increase to 26.9% in Q3? (Nischint Chawathe)
- Answer: Primarily due to high fresh business growth in the quarter; fresh commissions are higher than renewals, which will normalize over the policy lifecycle (Nilesh Kambli).
Long-Term Policy Impact
- Question: Does long-term business overstate first-year profit in IFRS? (Nidesh)
- Answer: While DAC is deferred, operating costs are high in year one; however, there is no Opex in years two and three, keeping the combined ratio in a similar range (Nilesh Kambli).
GST and Pricing
- Question: Did the GST cut on consumables benefit the loss ratio? (Sanketh Godha)
- Answer: The impact was insignificant relative to overall spends; improvements are more structural via pricing and loss cost management (Amitabh Jain).
Key Takeaway
Star Health delivered a robust Q3 FY2026, characterized by a 23% YoY growth in GWP and a significant jump in PAT to ₹449 crores under IND AS. The company successfully executed a strategic shift toward a 95% retail-heavy mix and high-quality SME corporate business, resulting in a 320 bps improvement in the combined ratio to 98.9%. Strategic focus on long-term policies (51% of fresh GWP) and digital-first distribution (94% digital origination) is enhancing capital efficiency and customer stickiness. While medical inflation remains a persistent challenge at 12-13%, management intends to maintain a mid-teens ROE through disciplined underwriting and annual price adjustments. Looking forward, the company is well-positioned to leverage the GST exemption tailwinds and policy reforms to sustain its 31%+ retail market leadership.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: