Page 13 - Insurance Times December 2021

ing and testing of all international trav- That said, the Rakesh Jhunjhunwala- — led by a higher share of retail health
ellers coming from or transiting backed company has been reporting in its product mix against the industry,
through South Africa, Hong Kong and losses ever since the emergence of a higher focus on SMEs in the group
Botswana. Covid-19, led by an increase in claims health segment, and better agent pro-
In a letter to the additional chief sec- across the network. The increase in ductivity. In FY21, it had posted a loss
retary/principal secretary/secretary claims due to the pandemic accounted due to one-offs and higher claim ratios
(Health) of all states and union terri- for 30 per cent of total net paid claims on account of Covid, which is expected
tories, Union Health Secretary Rajesh by value in FY21 and 40.5 per cent in to normalise after FY22E," Arihant
Bhushan asked them to ensure that the six months ended September 30. said.
samples of travellers turning positive Star Health logged a loss of Rs 380.27 Its combined ratio has been among the
are sent to the designated genome
crore in six months to September 30, best in the industry at 92–94 per cent,
sequencing laboratories promptly. in addition to Rs 825.58 crore loss in except in FY21, which was impacted by
As a proactive step, the government FY21. FY20 profit stood at Rs 268 a one-off event, it noted.
has already placed nations, where this crore. Choice Broking said peers it considered
VoC has been found, in the category of
With a new coronavirus variant, Omi- for benchmarking Star Health's valua-
'at risk' countries for additional follow-
cron, in the news, there could be con- tion operated in the general insurance
up measures of international travellers cerns over further Covid claims if the market as health insurance was one of
coming into lndia from these destina-
situation goes out of hand. But noth- their various offerings. "Star Health is
tions, he said in a letter dated Novem- ing is concrete, with WHO saying the demanding a mcap-to-net premium
ber 27.
details about Omicron's severity were earned multiple of 10.3 times, which
Meanwhile, several states have started still not clear. is at a premium to the peer average.
taking up measures to clamp down the Moreover, the demanded valuations
spread of the variant. For now, analysts are recommending a are at elevated premium to recent
subscribe rating on the issue, but "for
long-term only" and are cautiously capital issuance. Thus, considering the
Star Health IPO: RJ-backed above observations, we assign a ‘sub-
optimistic on the issue.
issue to open : Worth Angel Broking said the valuations asked scribe with caution’ rating for the is-
subscribing? by Star Health at 5.5 times FY21 mar- sue," it said.

The Rs 7,249-crore IPO by Star Health ket cap to gross written premium Insurers settle claims
& Allied Insurance Company (Star (GWP) was in-line with recent deals in
Health) is set to hit the market. the standalone health insurer space worth Rs. 20,859 crore
and appeared to be fair considering its
On the block is a fresh issue of Rs 2,000 Insurers have so far settled claims worth
positioning. It has recommended sub- Rs. 20,859 crore related to Covid-19.
crore and an offer for sale of 5.83 crore
shares in the price band of Rs 870-900. scribing "from a long-term perspective According to the latest data available
only". The brokerage said further im-
At the upper end of the price band, with the industry, the settlement ratio
the company is valued at nearly 5.9 pact of the Covid-19 pandemic could stood at 88 per cent as on October 13,
times its assets under management increase claims and any increase in for Rs. 20,859.4 crore. Of the total
competition could negatively impact
(AUM) as on September 30. The retail claims of 25,96,072, 22,84,429 have
quota is reserved at 10 per cent. the company’s profitability. been settled by insurers.
At the upper price band of Rs 900, the
Star Health, which commands a mar- Insurers, however, are now seeing a dip
ket share of 15.8 per cent in the health issue is valued at a P/BV multiple of in demand for Covid-specific policies.
14.2 times based on its FY21 book
insurance market as of FY21, stands "We find that the demand for health
out among other standalone health value per share of Rs 64. cover is now shifting towards non-com-
insurers in terms of size, strong growth Arihant Capital also has a subscribe municable diseases (NCDs) and critical
in gross written premium and better with long-term view rating. "The com- illnesses," Sanjay Datta, Head - Under-
operational performance, analysts pany has a better track record than its writing & Claims, ICICI Lombard Gen-
said. peers in the health insurance industry eral Insurance Company, told. T

The Insurance Times, December 2021 13