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Star Health and Allied Insurance Company Ltd

About the Company

Incorporated in 2006, Star Health and Allied Insurance Company (Star Health) has grown into the largest standalone health insurance company in India with a market share of 15.8%. Its comprehensive health insurance product suite insured 20.5 million lives in FY21 in retail health and group health, which accounted for 89.3% and 10.7%, respectively, of its total health gross written premium (GWP). It distributes its health insurance policies primarily through individual agents, which accounted for 78.9% of its GWP in FY21.

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. Its total number of individual agents grew at a CAGR of 27.3% from 0.29 million as of FY19 to 0.46 million as of FY21 and was 0.51 million as of September 30, 2021. Its distribution network has 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, which are small individual service centres, and over 6,892 in-house sales managers. It has also successfully built one of the largest health insurance hospital networks in India, with 11,778 hospitals as of September 30, 2021.

Objects of the Issue

* To undertake its existing business activities

* To undertake the activities proposed to be funded from the net proceeds

* To receive the benefits of listing of the Equity Shares.

Valuation

The Indian health insurance market continues to be underpenetrated, with a health insurance penetration of only 0.36% of GDP in 2019, compared to the global average of approximately 2.0% of GDP. Several demographic factors, including increasing life expectancy and population growth, as well as the high portion of out of pocket expenses as a percentage of total healthcare expenditure by patients in India (62.7% in 2018), are driving the need for healthcare services and the growth in the health insurance industry in India. Further, increased awareness of health insurance has been growing led by measures taken by the government, and this trend has been accelerated by the prospect of hospitalization due to COVID-19 as well as the rising cost of medical care in private hospitals. The gross direct premium for health insurers is expected to grow at approximately 18% CAGR over the next four years. Within this, the retail business is expected to grow at a CAGR of 23% between FY21-25 as compared to 15% and 11% CAGR growth in group and government business.

Star Health stands to benefit from positive industry growth trends given its leadership position in the attractive retail health segment. It has one of the largest and well-spread distribution networks in the health insurance industry and an integrated ecosystem. It offers a range of flexible and comprehensive coverage. The company’s financial performance was impacted in FY21 due to the pandemic. Going forward, it intends to enhance its market leadership by leveraging its strong brand. It aims to enhance existing distribution channels and develop alternative channels. It also intends to focus on product innovation and provide value-added services. Moreover, the investments in digitization would help the company achieve higher operational efficiencies and better customer service.

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SEBI Registration number is INZ000174330

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