/** blogpostTitle: Star Health FY26: Underwriting turns profitable, markets hit Q4 headline */

Star Health FY26: Underwriting turns profitable, markets hit Q4 headline

Star Health ended FY26 with a clearer operating improvement than the previous year, even though Q4 results looked messy on the surface. For the full year, gross written premium (GWP) on an n basis rose to 20,369 crore, up 16% year-on-year. Profit after tax (Ind AS) increased 16% to 911 crore. The more important shift was in underwriting. The combined ratio improved to 98.8% from 101.1% in FY25 and underwriting moved to a profit of 206 crore versus a loss of 165 crore last year.

The quarter, however, showed how volatile reported earnings can be when investment markets move sharply. In Q4 FY26, Star Health reported an underwriting profit of 186 crore and a combined ratio of 95.7%, but a marked-to-market loss of 558 crore on the investment portfolio resulted in a loss after tax of 55 crore.

Growth: strong retail fresh momentum, led by proprietary channels

Retail remained the centre of gravity. The investor presentation reported retail fresh GWP of 4,567 crore in FY26, up 37% year-on-year. Fresh business was overwhelmingly sourced through proprietary channels. Agency and digital D2C together contributed 91% of retail fresh business, while partnership channels contributed 9%.

The agency engine continued to scale. Total agency force increased to 8.3 lakh in FY26 from 7.8 lakh in FY25. Productivity also improved, with average agent productivity rising to 4.1 lakh, up 18% year-on-year. Management reiterated on the call that it is targeting one million agents over the next two years.

Digital was a parallel growth lever. Retail fresh GWP from digital channels increased to 928 crore in FY26, up 35% year-on-year. Within fresh digital business, the mix was 78% digital D2C and 22% digital partners. The company also reported 52% growth in organic traffic and 14 million plus app downloads.

Underwriting improvement: loss ratio and group claims normalisation

Star Health’s FY26 improvement was visible in both annual and quarterly trend lines. Loss ratio declined to 68.7% in FY26 from 70.7% in FY25. The expense ratio also improved modestly to 30.1% from 30.4%.

Claims ratios improved across retail and group lines. Retail ICR (Ind AS) was 68.2% in FY26 versus 69.2% in FY25, while group ICR improved to 79.1% from 90.8%. In Q4, the improvement was sharper: retail ICR at 64.8% and group ICR at 73.5%.

On the call, management attributed loss ratio improvement to a combination of portfolio recalibration and operational levers rather than one single factor. These included analytics-led pricing, strengthened underwriting, portfolio optimisation towards preferred segments, improved fraud, waste and abuse controls, and scaling of wellness and home-based care interventions. Management also stated it expects to reprice almost 80% of the book between Q4 and Q1, with benefits expected to flow through earnings over subsequent periods.

Customer experience, claims operations, and wellness ecosystem

Operationally, Star Health continued to highlight scale in claims processing and service outcomes. Claims paid increased to 11,903 crore in FY26, with paid claims count at 3.0 million. Cashless share rose to 84% by count, with 78% of cashless claims routed through agreed network hospitals (ANH). The presentation also cited 92% cashless processed within three hours and a retail claim settlement ratio of 92%.

Digital service adoption is becoming a more central part of the model. Fresh digital premium collection was 96%, and 95% of fresh policies were sourced digitally. The app had 14 million plus downloads and monthly active users of 1.5 million plus. Claims intimation through the mobile app was reported at 87,000 in FY26.

A core theme in both the presentation and the concall was prevention and at-home care. Preventive health checkups increased from 385 thousand in FY25 to 548 thousand in FY26. Telemedicine rose from 62 thousand to 117 thousand, and home healthcare from 17 thousand to 92 thousand. The company also stated that customers who opted for preventive health checkup services showed 7.3% higher NOP retention in the first renewal.

Investments: higher assets, lower yield, and Q4 volatility

Total investment assets increased to 21,007 crore in FY26 from 18,296 crore in FY25. Asset allocation remained predominantly fixed income, with 73% in government securities, SDLs, AAA and TREPs. Despite higher assets, investment income declined to 1,091 crore from 1,260 crore, and annualised investment yield fell to 5.8% from 7.6%.

The key swing factor was marked-to-market. FY26 saw an MTM loss of 127 crore, while Q4 alone saw a much larger MTM loss of 558 crore. This was the principal driver behind the reported quarterly loss after tax.

Management addressed this by introducing a normalised investment yield framework pegged at 8% annualised, intended to smooth reported profitability against short-term market movements. Under this approach, normalised PAT increased to 1,222 crore and normalised ROE to 13.1%.

What to watch from here

The FY26 message was consistent: improve underwriting outcomes while continuing to grow through proprietary distribution and digital channels, with a high new-to-insurance mix. Management also flagged that from the next financial year it plans to report 1/n measures for both business and growth, aligning reporting conventions with the broader Ind AS environment.

For investors, the year leaves three clean focal points. First, the underwriting turnaround is visible in the combined ratio and underwriting profit. Second, customer and service metrics improved, including persistency at 99% and NPS at 62. Third, investment volatility remains a material swing factor for quarterly profitability, as seen starkly in Q4.

Star Health enters FY27 positioned as a scaled retail health insurer with improving underwriting discipline, but with headline earnings still exposed to market-to-market movements on investments.