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In-line performance

* Gross written premium at INR44.2b grew 1% YoY (in line), driven by 8% YoY growth in retail health premium, which was offset by 47% YoY decline in group health premium. For 1HFY26, the premium grew 2% YoY to INR80b.

* Net earned premium grew 10% YoY to INR40.8b (in line). For 1HFY26, NEP grew 11% YoY to INR80b.

* Claims ratio at 71.5% (vs. our estimate of 72.5%) declined 130bp YoY, while net claims incurred grew 8% YoY to INR29.2b.

* Commission ratio at 16.3% (vs. our est. of 15%) grew 250bp YoY, while net commission grew 26% YoY to INR6.9b (8% higher than estimates).

* Expense ratio at 16% (vs. our est. of 16.5%) declined 50bp YoY, with employee expenses down 2% YoY and other expenses up 17% YoY.

* Better-than expected claims ratio and expense ratio, offset by higher-thanexpected combined ratio, led to in-line combined ratio of 103.8% (our estimate of 104%), which increased 80bp YoY.

* While underwriting loss at INR2b was lower than our estimates, a 9% miss in investment income at INR3b led to in-line PAT at INR0.5b (-51% YoY). For 1HFY26, PAT declined 26% YoY to INR3b.

* Solvency ratio was stable at 2.2x.

Valuation and view

Premium growth has been subdued, largely owing to the impact of 1/n accounting. Going forward, GST exemption, as well as the impact of 1/n going away, should improve the growth trajectory for the business. We remain optimistic about the overall prospects for Star Health, backed by: a) consistent growth in retail health, given its under-penetration and GST exemption, b) a strong push from the banca channel, and c) steady growth in specialized products and deepening presence. We believe that Star Health can deliver longterm growth with the investments made in profitable channels and products. We may review our estimates and TP after the concall on 29th Oct’25.

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