ICICI Direct initiates coverage on Star Health and Allied Insurance

Star Health is the largest standalone insurer engaged in health insurance segment with relatively superior market share, operating performance.

-* Star Health is a market leader in the retail health insurance segment with 32%+ market share, as of December 2021 and 29.8% market share in the number of persons covered (as of FY21)

- Star Health has 768 branches and 12000+ network hospitals, with a presence in 25 states and five union territories

Key triggers for future price performance

- Large population base along with massive under penetration provides a long term sustainable growth opportunity. Increased awareness, led by Covid, is likely to act as inflection point. Rising income, product development, medical inflation is expected to pave the way for next leg of growth. We expect insurance penetration to double (from 3.8% in FY21) to 17%, 18% CAGR in total health, retail health premium, respectively, in FY21-31E

- Star Health is a market leader in retail health insurance, with market share in retail GDPI at 31.3%. Going ahead, market share dominance is expected to continue led by focus on products innovation, competitive pricing and strong distribution push. Further, higher proportion of retail business (~88-89%), competitive pricing and strong distribution push to drive growth

- Largest agency channel with ~5.3 lakh agents form a pillar to drive ~77% of business. Focus on agency channel coupled with strategic tie-ups with digital ecosystem partners to enable pedalling healthy growth in premium

- Star Health has consistently delivered combined ratio at 93-95% in FY16-20. Covid led to higher claims resulting in under writing loss, which, we believe, will normalise from FY23E onwards. Strong underwriting, tie-up with hospital will restrict claims while focus on opex (through in-house claim settlement and gradual improvement in efficiency) is seen boosting profitability and return ratios ahead

Shares of Star Health and Allied Insurance Company Limited was last trading in BSE at Rs. 659.70 as compared to the previous close of Rs. 654.35. The total number of shares traded during the day was 10943 in over 992 trades.

The stock hit an intraday high of Rs. 665.00 and intraday low of 648.95. The net turnover during the day was Rs. 7186745.00.

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Link to the report

Source : Equity Bulls

Keywords

StarHealthandAlliedInsuranceCompany StarHealth INE575P01011 ICICIDirect InitiatingCoverage