Star Health H1 FY27 slides: underwriting profit surges amid digital push

Star Health and Allied Insurance Company Limited (NSE:STARHEALTH) recently unveiled its H1 FY27 financial performance, highlighting a remarkable recovery in underwriting profitability despite a slight dip in share price. The insurer's president and CEO, Prasad Halbe, emphasized their strategic focus on three pillars: sustainable growth via proprietary channels, disciplined underwriting profitability, and customer-centric digital engagement.

In the first half of FY27, the company reported a 57% year-over-year surge in underwriting profit, reaching INR 815 crores, a testament to their successful pivot. Star Health's strategic priorities were underscored by a 19% year-over-year increase in gross written premium (GWP) on a reported 1/N basis, reaching INR 9,562 crores.

Notably, retail fresh GWP surged 36% to INR 1,630 crores, driven by strong first-time buyer acquisition and accelerated digital sales. The combined insurance service ratio (CISR) improved to 97.9% in H1 FY27, marking a return to profitability after a year of losses. The insurer's financial performance showcased significant improvements across key metrics, including a substantial 16.3% expansion in return on equity to 16.3% on an annualized basis, up from 11.6% in the prior year.

The normalized ROE reached 15.1%, demonstrating improved operational efficiency. Underwriting performance played a pivotal role in this turnaround, with the underwriting result turning positive at 4.2%, up from a loss of 0.5% in the prior year. The underwriting margin expanded to 2.1% from negative 0.3%. Investment ROE contributed 17.7%, buoyed by an investment yield of 8.5%.

The company's investment portfolio grew to INR 22,491 crores, with fixed income assets comprising INR 18,222 crores and equities and other investments totaling INR 4,269 crores. Star Health's distribution strategy centers on proprietary channels, which now account for over 90% of overall gross written premium. The agency network remains the foundation, with 8.7 lakh agents, of which 39,000 were added in H1 FY27 alone.

Direct-to-consumer (D2C) operations, while representing just 5.2% of overall GWP, witnessed explosive 137% retail fresh growth. The company's technology investments span the entire value chain, with the ATOM Pro app enabling end-to-end sales journeys and the Star THRIVE wellness platform aiding customer engagement.