STARHEALTH Q2 FY27 Earnings Call: Underwriting Profit Swings to Rs. 99 Cr, Fresh Retail GWP Jumps 35%

STARHEALTH held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Fifth Consecutive Quarter of Underwriting Improvement

• Q2 FY27 GWP of Rs.5,275 Cr, +19% YoY (reported 1/N basis); H1 FY27 GWP Rs.9,562 Cr, +19% YoY; fresh retail health GWP grew 35% YoY in Q2 FY27 and 36% YoY in H1 FY27.
• Underwriting profit of Rs.99 Cr in Q2 FY27 vs a loss of Rs.40 Cr in Q2 FY26 (positive swing of Rs.139 Cr); H1 FY27 at Rs.210 Cr vs a loss of Rs.24 Cr in H1 FY26 — H1 FY27 already exceeds the full-year FY26 underwriting result of Rs.198 Cr.
• Q2 FY27 PAT of Rs.265 Cr, up over threefold YoY (vs Rs.80 Cr in Q2 FY26); H1 FY27 PAT up 57% YoY to Rs.815 Cr. Normalized PAT (at 8% normalized annual investment yield) was Rs.390 Cr in Q2 FY27 (+70% YoY) and Rs.775 Cr in H1 FY27 (+56% YoY).
• CISR improved 2.9% to 98% in Q2 FY27 and 2.4% to 97.9% in H1 FY27; CFO Nilesh Kambli confirmed Q2 FY27 marks the fifth consecutive quarter of underwriting profit improvement, driven by both loss ratio and expense ratio.
• Annualized normalized ROE of 15.1% in H1 FY27 vs 11.2% in H1 FY26; management said the focus is on driving ROE from mid-teens to higher teens over a period of time (period unspecified) — an aspiration, not a dated target.
• Accounting change from Q2 FY27 — the company discontinued recognition of insurance finance charges and restated prior periods; management stated there is no impact on PAT or underwriting results. Analyst noted insurance revenue was restated ~1% below the prior base.

Proprietary Channels Drive Fresh Retail Momentum

• Retail health market share of 30% in Q2 FY27 and 29% in H1 FY27; management noted reported share is influenced by long-term policies' 1/N reporting, with like-for-like comparability restored only by FY28.
• Proprietary channels (agency + digital D2C) contributed over 90% of retail business; 39,000 agents added in H1 FY27 taking the network to 8.7 lakh, with agency productivity up 19% YoY in H1 FY27.
• D2C share of the overall book rose from 8% to 13% as of Q2 FY27, with D2C growing 137% YoY in H1 FY27 at superior combined ratios; the agency channel (70-75% of fresh business) grew ~25% in Q2 FY27.
• Semi-urban/rural fresh business grew over 3x metro/urban; growth is driven by affordable products sold in tier 2, tier 3 cities and semi-urban areas.
• New-to-insurance mix rose to 93% in Q2 FY27 (vs 89% in Q2 FY26); CEO Anand Roy estimated Star Health's share of new-to-insurance customers at roughly 40% in FY 2026-2027, explicitly cautioning the estimate may be wrong.
• Younger-cohort focus — the company launched Youngstar Neo, a revised version of Youngstar targeted at sub-40 consumers; management did not disclose a specific average-age figure, saying the focus has been consistent over the last 7-8 quarters.
• Multi-year policies represent close to 50% of the fresh book as of Q2 FY27 (measured on a fresh basis, not on stock), lending earned-premium visibility and persistency.

Retail-Led Improvement; Renewal Book Below 100% Combined

• Loss ratio improved ~250 bps in Q2 FY27 (figure cited by the analyst); COO Amitabh Jain attributed it to combined claim frequency-severity loss cost held at mid-single digits while earned premiums grew close to double digits.
• Loss ratio has surprised positively for the last 5 quarters; Jain attributed the improvement largely to the retail book, as group business now makes a very small portion of overall premium.
• Renewal book operating at less than 100% combined ratio on a standalone basis, confirmed by management in Q&A in Q2 FY27.
• Monsoon was "not a factor" in Q2 FY27 claims, per Anand Roy — improvement came from company-deployed strategies, specifically home health care and telemedicine, not seasonal factors.
• More than 1 lakh telemedicine consultations plus home care services delivered in Q2 FY27; claims frequency was managed below Q2 FY26 despite an increase in surgical frequency. The specific loss-ratio impact and share of claims routed through these services were not disclosed.
• 22.5 lakh claims settled in H1 FY27, 83% cashless — probably the highest in the industry; retail claim settlement ratio 92.4% in H1 FY27 (up over 1%), renewal ratio 102% (up 4%), NPS 65 as of September 2026 (up 4 points).
• Close to 80% of the book was repriced in FY 2025-2026; the remaining ~20% is being repriced in FY 2026-2027 with a plan in place (Amitabh Jain), and further corrections based on loss ratio requirements will also happen.

IRDAI Consultation Paper, Supreme Court Order, Dark Patterns

• IRDAI consultation paper "Recalibrating Economics of Insurance Distribution" (released 23 September 2026) — Star Health has submitted its views; management stated it is prepared to meet the new requirements and contribute to the national ambition of "insurance for all by 2047". Comments pertain to the paper in its current form; final regulations are awaited.
• Management's read on the proposals — porting commissions aligned to renewal rates should remove the incentive for commission-driven churn; higher commissions for smaller towns/rural areas and the one-insurer-per-product-segment requirement align with Star Health's distribution footprint; internal estimates indicate a credible path to the proposed expense-of-management limits.
• On AoM structure — management believes regulation/mandate-driven products (motor third party, crop insurance, government-sponsored health insurance programs) should be removed from the base so AoM is more reflective of actual distribution cost; management said it remains to be seen how it pans out.
• AUM cap compliance — Star Health is already operating under AUM regulations as of Q2 FY27, among the few SAHI companies to do so, is fully compliant, and will comply once the guidelines become regulation; no quantified estimates on other OpEx line items were provided.
• Supreme Court drug pricing order — Amitabh Jain said the order is not notified yet and will take its own time to execute; such orders generally do not directly impact package rates negotiated with hospitals but reflect in itemized bills on medical admissions. Close to 80% of claims come through package rates; the ~20% itemized-bill portion was flagged by the analyst as having potential leeway.
• IRDAI's proposed public insurance registry (PIR) — management welcomed it as digital public infrastructure that can reduce information asymmetry, strengthen underwriting controls, simplify claims processing and strengthen fraud detection.
• Dark patterns — management is cognizant of the IRDAI's sharp focus on dark patterns in digital journeys and will ensure full alignment with the evolving framework; the forthcoming dark-patterns/data regulation will apply to all industry players once effective.

Duration Extension, Equity Discipline, AI at Scale

• Equity exposure at slightly less than 14% of the portfolio, unchanged QoQ; CIO Anish Srivastava clarified the 15% cap referenced from the Q3 FY 2025-2026 call reflects internal strategy, not a formal limit, and equity may rise incrementally by 1% (period unspecified) or further if markets are extremely attractively priced.
• Duration extended to target ~4 years via longer-duration G-Sec positions; management still expects policy rate hikes by the RBI and may extend into longer-duration assets if yields rise further.
• Fully invested in REITs and InvITs as of Q2 FY27 — near the 3% regulatory limit with a margin of safety; AIFs hold ~2.1-2.2% of funds, with the AIF book gradually growing.
• IFRS classification — the equity book, ETFs, REITs and InvITs are fully classified as FVTPL (a deliberate choice), while the entire debt book is held to maturity. A realized vs unrealized split of the Rs.59 crore Q2 FY27 investment-related loss (excluding interest income) was not provided.
• AI bots processed over 7.5 million minutes of call volume in Q2 FY27 at less than 20% of the cost of equivalent human deployment; AI quality assurance analyzed over 10 million minutes across 9 languages, and service bots autonomously resolved over 1,000 interactions/day.
• Digital stack upgrades — Salesforce CRM upgrade deployed to improve D2C lead conversion; over 50% of active agents using Atom Pro; Amplify Health partnership live for FWA automation.

High Base Normalization; Disclosure Gaps Persist

• Management aspires to grow fresh business at 20%+ consistently over the long term and hopes to maintain this pace in FY 2026-2027, measuring momentum via policies sold, agent activation and digital platforms.
• Growth moderation expected in 2H FY 2026-2027 — with FY26's GST-led growth entering the base, headline growth rates will normalize for the industry and Star Health; management asserted performance is structurally sound, noting the vintage book is about 80% of the portfolio and improvement began in Q2 FY26, before GST-led growth.
• Interim new-business trends withheld — Anand Roy declined to share trends from late September 2026 to date, stating growth numbers will be disclosed at the end of Q3 FY 2026-2027; the GST impact is factored into the FY 2026-2027 business plan.
• Distribution reform open item — management is awaiting clarification on whether the second and third years of multi-year policies will be considered "fresh" or "renewal" under the proposed distribution reforms; no timeline for the clarification was provided.
• Commission ratio moderated YoY in Q2 FY27 despite strong fresh retail growth, attributed to the full-year flow-through of FY 2025-2026 initiatives — including the senior citizen commission rate reduction from 15% to 10% — as more than 12 months have elapsed since implementation.
• Disclosure gaps flagged by analysts — requests for lives covered and policies sold (Q1 and Q2 FY27, from Raghav Garg of Ambit Capital), the new retail health business number, and the retail indemnity loss ratio were not disclosed on the call; management agreed to provide data offline.
• Senior citizen book — per the Q1 FY27 call, fresh sourcing was below 5% and ~20% sat in the in-force book; Anand Roy did not quantify the pace of in-force decline, stating the company is not avoiding senior citizens and aspires to provide coverage to all age groups, income groups and geographies.