Star Health and Allied Insurance IPO
About Star Health Insurance
Star Health is the largest private health insurer in India with a market share of 15.8% in the Indian health insurance market in Fiscal 2021. Star Health has been leading the growth in health insurance industry with 36% CAGR in its Gross Direct Premium (GDPI) over the last 5 years (FY16:21) compared to Health Industry growth rate of 18% over this period. As a result, Star Health has been improving its market share on YoY basis and now commands a healthy market share of 16% (ex. Travel & PA) in FY21. Strong growth for Star Health is attributable to its leadership in retail health segment, which has grown at a CAGR of 33% over FY19-21 and commands the industry’s highest market share of 31% in retail health segment (ex. Travel & PA) in FY21.
How Star Health Sell Health Policies ?
The company distributes its health insurance policies primarily through individual agents, which accounted for 78.9% of its GWP in Fiscal 2021.
Star Health has robust network with 4.6 Lakh agents as of Mar’21.
Individual agents are the primary method of distribution in the health insurance industry, since health insurance is largely an assisted product in which customers often require help in selecting the policy best suited to their needs and during the claims process.
It also sell policies via Policy Bazar and it has the largest market share of health policies sold on Policy Bazar Platform.
Distribution and Presence of Star Health Insurance
As of September 30, 2021 the distribution network had grown to 779 health insurance branches spread across 25 states and 5 union territories in India. Its existing branches are also supplemented by an extensive network of over 562 Sales Managers Stations (“SMS”), which are small individual service centres, and over 6,892 in-house sales managers, as of September 30, 2021. The other origination channels include distribution by direct online sales through telemarketing and their website, brokers, insurance marketing firms and web aggregators.
Generally, if insurance company has large number of hospitals then it is always beneficial of policy holders. If policy holder admit in network hospital then they can avail the cash-less facility and they don’t have to pay anything from the pocket. Star Health has also successfully built one of the largest health insurance hospital networks in India, with 11,778 hospitals as of September 30, 2021.
Impact of COVID-19?
a) Star Health settled 1.5 Lakh covid related claims in FY21.
b) Overall COVID-19 gross incurred claims amounted to Rs1600 Crores.
c) Company incurred a loss of Rs. 825 Crores due to COVID-19
Important Financial Parameters
|Particulars (in Cr)||FY21||FY20||FY19|
|Gross Written Premium||9300||6800||5400|
|No. of Policies Sold (mn)||7||5||4|
|Number of agents (in mn)||0.4||0.36||0.3|
|Number of Hospitals||11000||10000||9000|
|Income from (Insurance Business)||-1300||162||35|
|Income (from Investment)||423||293||195|
i. Largest and well spread distribution networks
ii. Diversified product suite
iii. Strong risk management
Objects of the Star Health and Allied Insurance IPO:
Star Health and Allied Insurance IPO Details:
|Open Date:||Nov 30 2021|
|Close Date:||Dec 02 2021|
|Face Value:||₹ 10 Per Equity Share|
|Issue Type:||Book Built Issue|
|Issue Size:||7,249.18 Cr.|
|Lot Size:||16 Shares|
|Issue Price:||₹ 870 - 900 Per Equity Share|
|Listing Date:||Dec 10 2021|
Promoters And Management:
Financials of Star Health and Allied Insurance IPO:
|Particulars (in Millions)||Mar 21||Mar 20|
|Interest, Dividend & Rent||1,618.21||989.06|
|Profit on sale of investments||12.93||22.38|
|Investments written off||195.21|
|Key Management Personnel Remuneration||685.26||25.7|
|Interest on NCD||256||256|
|Profit Related Commission||1.92||5|
|Late Fees / Penalty||1.15|
|Bad Debts Written Off||1.93||4.96|
|Loss/(Gain) on sale / Discard of Fixed Assets||32.35||-1.31|
|Profit Before tax||-10,459.50||4,134.25|
|Profit After Tax||-8,256||2,680.02|
Comparison With Peers:
Recommendation on Star Health and Allied Insurance IPO:
Lead Manager of Star Health and Allied Insurance IPO:
- Ambit Capital Private Limited
- Axis Capital Limited
- BofA Securities India Limited
- Citigroup Global Markets India Private Limited
- CLSA India Private Limited
- Credit Suisse Securities (India) Private Limited
- DAM Capital Advisors Ltd (Formerly IDFC Securities Ltd)
- ICICI Securities Limited
- IIFL Holdings Limited
- Jefferies India Private Limited
- Kotak Mahindra Capital Company Limited
- SBI Capital Markets Limited