Star Health Insurance: CARE Ratings assigns credit rating of ‘AA+/Stable’

Star Health and Allied Insurance Company Limited (Star Health Insurance), one of the leading insurance companies in India, has been rated 'CARE AA+; Stable; and ‘CARE AA: Stable’ rating for a subordinate debt amounting to Rs 470 crore by CARE Ratings, the company said in its press release on April 11.

Star Health and Allied Insurance Company is a leading market player in the retail health insurance space, and the company claims that it has comfortable solvency margins and improved profitability metrics. 

"Our centre of attention has been on sustainable long-term growth. We continue to be the leading player in the industry, with a large market share. This rating is a testament to our overall performance, and it will be our constant endeavour towards improving business across all parameters. As we navigate through dynamic market conditions, our focus remains on delivering value to our customers and stakeholders," said Anand Roy, MD & CEO, Star Health Insurance.

In a year, shares of the company have given negative returns to the tune of 5.41 per cent against a more than 28 per cent rise in the benchmark Nifty50 index.

Rationale and key rating drivers

Care Ratings said that ratings assigned to Star Health and Allied Insurance Company Limited (Star) factor in its leading market position in retail health,
insurance space, comfortable solvency margins, and improving profitability metrics owing to strong underwriting practices.

The rating further factors in ownership and articulation of need-based support from the promoters in the form of capital and management support via representation on the board and various committees.

Rating sensitivities: Factors likely to lead to rating actions

Positive factors: Factors that could lead to positive rating action/upgrade:

• Ability to demonstrate growth and increase market share on a sustained basis.
• Sustained improvement in underwriting profitability and overall return metrics.
• Ability to raise growth capital and maintain solvency buffers exceeding 2.2 times.

Negative factors: Factors that could lead to negative rating action/downgrade:

• Any material changes in the shareholding pattern, leading to the expectation of diminished shareholder support.
• Deterioration in underwriting performance and thereby decline in profitability metrics.
• Decline in the solvency margin below 1.70x on a sustained basis.
• Significant decrease in the size of operations and market share.

The 'Stable' outlook reflects CARE Ratings Limited's (CARE Ratings’) view that the company will maintain its market share with a continued focus on underwriting profitable business, the ratings agency added. 

About Star Health Insurance 

As per the company's release, Star Health Insurance commenced operations in 2006 as India’s first standalone health insurance company with business interests in health, personal accident, and overseas travel insurance. The company uses its vast resources to focus on service excellence and product innovation to deliver the best to its customers. Star Health has introduced many industry-first and innovative health insurance products to individuals, families, and corporations. Star Health is also a prominent Bancassurance player with long-standing relationships with many financial institutions. 

As of December 31, 2023, Star Health has 877 branch offices across India. The company has 14,203 network hospitals in India. The company has a wide distribution network of 6.84 lakh agents, which is among the largest in the insurance sector. In FY23, Star Health had a gross written premium of Rs 12,952 crore and a net worth of Rs 5,430 crore.