Star Health Q4FY24 results: Net profit up 40% to Rs 142 crore
The net profit of the largest standalone health insurer – Star Health and Allied Services – rose nearly 40 per cent year-on-year to Rs 142 crore in the January-March quarter of FY24, compared to Rs 102 crore in the same period a year ago thanks to better investment income and an improved combined ratio.
Subsequently, net profit fell 50 percent from Rs 289.55 crore due to underwriting losses in the January-March period.
The company’s underwriting loss in the fourth quarter of FY24 stood at Rs 91.05 crore, compared to a profit of Rs 114.22 crore in the third quarter of FY24.
“There is seasonality in the industry, and that is a special way that reinsurance accounting works. The fourth quarter accounts for 34 percent of our turnover. Income takes place over a period of twelve months, with the costs of this 34 percent being booked in advance. There is always an underwriting loss that is booked in the fourth quarter. The upfront costs result in an underwriting loss,” said Nilesh Kambli, Chief Financial Officer (CFO), Star Health and Allied Services.
Investment income in the quarter under review rose to Rs 3,953.3 crore, up 35 per cent from Rs 2,915.2 crore in the January-March quarter of FY23, on the back of better interest rates.
“Our focus on quality activities, leading to a combined ratio of 64.1 percent, has led to an improvement in profits. Second, our investment portfolio has grown and interest rates are higher. The growth in investment returns as a result of the higher interest rates allows us to achieve high investment returns. The combined improvement in ratio and investment income has led to higher investment growth of Rs 142 crore,” Kambli said.
The health insurer’s combined ratio stood at 92.77 percent in the fourth quarter of FY24, compared to 91.35 percent in the same period a year ago. The combined ratio in the quarter ended December 31, 2023 was 97.38 percent.
Moreover, the company’s claims ratio increased to 64.13 percent from 61.99 percent in the same period last year. Subsequently, the claims ratio in the third quarter of FY24 was 67.69 percent.
The company’s management expense ratio stood at 29.79 percent in the quarter under review, compared to 29.23 percent in the same period last year, due to digitalization and technology initiatives.
“We are taking several steps to keep our expense ratio under control. We have a cost optimization committee that looks at every expense, and we have saved a lot of money by taking several initiatives that reduce costs for our organization, both in terms of intermediary and administrative operating costs. We have also spent on digitalization and technology initiatives, which will allow us to automate many of our processes,” Kambli said.
The insurance company’s gross premium (GWP) rose during the quarter to Rs 4,968 crore in the fourth quarter of FY24, compared to Rs 4,199 crore in the same period a year ago. Net premium also rose to Rs 4,570 crore, compared to Rs 3,993 crore in the same quarter last year.
First print: April 30, 2024 | 6:25 PM IST