 "Star Health")
The net profit of the largest standalone health insurer – Star Health and Allied Services – has increased by nearly 40 per cent year-on-year (Y-o-Y) to Rs 142 crore in the January-March quarter of FY24, as compared to Rs 102 crore in the year-ago period on the back of better investment income and improved combined ratio.
Sequentially, net profit fell 50 per cent from Rs 289.55 crore due to underwriting loss in the January-March period.
The underwriting loss of the company in Q4 FY24 was Rs 91.05 crore as compared to a profit of Rs 114.22 crore in Q3 FY24.
“There is a seasonality in the business, and that is a particular way in which reinsurance accounting works. Q4 accounts for 34 per cent of our business. Earnings happen over a 12-month period where the cost of this 34 per cent is booked upfront. There is always an underwriting loss which is booked in Q4. The upfront cost leads to an underwriting loss,” said Nilesh Kambli, chief financial officer (CFO), Star Health and Allied Services.
The investment income in the quarter under review increased to Rs 3,953.3 crore, 35 per cent over Rs 2,915.2 crore from the January – March quarter of FY23 due to better interest rates.
“Our focus on quality business leading to a combined ratio of 64.1 per cent has led to an improvement in profits. Secondly, our investment book has been growing and the interest rates are higher. So, growth in investment income due to higher interest, we are able to book high investment income. The combined ratio improvement as well as the investment income has led to higher investment growth of 142 crore,” Kambli said.
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The combined ratio of the health insurer stood at 92.77 per cent in Q4 FY24 as compared to 91.35 per cent in the year-ago period. The combined ratio in the quarter ended 31 December 2023 stood at 97.38 per cent.
Further, the claims ratio of the company increased to 64.13 per cent from 61.99 per cent in the year-ago period. Sequentially, the claims ratio was 67.69 per cent in Q3 FY24.
The expenses of management ratio of the company stood at 29.79 per cent in the quarter under review as compared to 29.23 per cent in the year-ago period due to digitisation and technology initiatives.
“We are taking multiple steps to control our expense ratio. We have a cost optimisation committee which looks at each and every spending, and we have saved a lot of money by taking various initiatives that reduce the cost for our organisation both on the cost of intermediary as well as the admin operating cost. Also, we have been spending on digitisation and technology initiatives due to which we are able to automate a lot of our processes,” Kambli added.
The gross written premium (GWP) of the insurance company during the quarter rose to Rs 4,968 crore in Q4 FY24 as against Rs 4,199 crore in the year-ago period. The net premium also increased to Rs 4,570 crore as compared to Rs 3,993 crore in the same quarter of the year-ago period.
