Star Health Q3 FY26: Combined ratio improves to 98.9%

Star Health and Allied Insurance Company Limited (Star Health), India’s largest standalone health insurer, reported a sharp improvement in profitability for the third quarter of FY2025-26, supported by stronger premium growth, better underwriting performance, and higher investment income. Under Ind AS accounting, the company posted profit after tax (PAT) of ₹449 crore for Q3 FY26, up 414% year-on-year (YoY) from ₹87 crore in Q3 FY25.

A key operational takeaway was the combined ratio improvement to 98.9% in Q3 FY26, down 317 basis points from 102.1% in Q3 FY25. The company also reported a moderation in loss ratio and a marginal improvement in expense ratio, indicating tighter underwriting and cost control.

Q3 FY26 profitability jumps on underwriting swing

The December 2025 quarter marked a swing in underwriting performance for Star Health. The company reported an underwriting profit of ₹46 crore in Q3 FY26 versus an underwriting loss of ₹79 crore in Q3 FY25. This change aligned with the improvement in the combined ratio to below 100%, which typically indicates underwriting profitability.

Profit before tax (PBT) rose 408% YoY to ₹594 crore in Q3 FY26 from ₹117 crore a year earlier. Alongside operating improvement, investment income increased sharply to ₹569 crore in Q3 FY26, up 176% from ₹206 crore in Q3 FY25. Star Health said its investment yield stood at 9.6%.

Premium growth remains led by retail business

Star Health closed Q3 FY26 with gross written premium (GWP) of ₹5,047 crore (N basis), a 23% YoY increase from ₹4,099 crore in Q3 FY25. Retail GWP rose 27% YoY to ₹4,838 crore (N basis), with the company attributing growth to a 60% YoY increase in fresh retail premiums.

The company also disclosed that digital channels accounted for 76% of overall premium collections during the quarter. It added that AI-enabled systems handled 57% of claims traffic, indicating a growing role for automated workflows in servicing.

Combined ratio improves as loss ratio moderates

Star Health reported an Ind AS combined ratio of 98.9% for Q3 FY26, improving by 317 bps from 102.1% in Q3 FY25. The loss ratio improved by 301 bps to 68.8% in Q3 FY26 (from 71.8%), while the expense ratio improved by 16 bps to 30.1% (from 30.3%).

The company linked these changes to portfolio recalibration, disciplined underwriting, prudent expense management, and technology-led delivery. Management commentary also referenced improved operating efficiency as a driver of profitability during the quarter.

Claims and expenses: growth slower than premium expansion

On the cost side, Star Health reported net incurred claims of ₹2,923 crore in Q3 FY26, up 7% YoY. This slower growth in claims compared with premium expansion helped support the underwriting turnaround.

Net expenses rose 11% YoY to ₹1,280 crore during Q3 FY26 (from ₹1,151 crore). Despite absolute expense growth, the expense ratio moved slightly lower, reflecting improved operating leverage relative to premium growth.

9M FY26: PAT rises to ₹966 crore; combined ratio at 99.8%

For the first nine months of FY26, Star Health reported GWP of ₹13,856 crore (N basis), a 16% YoY increase. Retail GWP rose 20% YoY to ₹13,170 crore, led by 37% YoY growth in fresh retail premiums.

Ind AS PAT for 9M FY26 stood at ₹966 crore, up 87% from ₹516 crore in 9M FY25. The combined ratio for 9M FY26 improved to 99.8%, an improvement of 222 bps over 102.1% in 9M FY25. The loss ratio improved by 124 bps to 70.0%, and the expense ratio improved by 99 bps to 29.8%.

Star Health said it settled 1.36 million claims amounting to ₹8,900 crore-plus during 9M FY26.

Key numbers at a glance

Distribution scale and FY25 base metrics

Star Health operates a multi-channel distribution network with 915 offices and over 8 lakh agents, supported by bancassurance and financial institution partners. The insurer also reported 14,500-plus network hospitals and 14,700-plus employees.

For FY2025, Star Health reported GWP of ₹16,781 crore and net worth of ₹8,668 crore.

Management commentary and strategic direction

Management commentary linked the Q3 FY26 operating improvement to portfolio recalibration, disciplined underwriting, prudent expense management, and technology-led service delivery. In earlier commentary, the company also highlighted ambitions to reach ₹30,000 crore in GWP and to triple PAT to ₹2,500 crore by FY28.

Separately, during a Q2 FY26 earnings call held on October 29, 2025, Managing Director Anand Roy said the company deliberately scaled back its group book as loss ratios in corporate accounts rose, with an aim to improve underwriting quality and reduce exposure to loss-making corporate accounts.

What the Q3 FY26 numbers signal for investors

The Q3 FY26 result shows how premium expansion combined with loss ratio moderation can quickly change profitability in health insurance. The swing from an underwriting loss to an underwriting profit, along with a combined ratio below 100%, signals better alignment between pricing, claims, and expenses during the quarter.

Investment income also played a material role, rising to ₹569 crore in Q3 FY26, while the company reported an investment yield of 9.6%. For investors tracking insurers, these elements matter because reported PAT can be influenced both by underwriting performance and the investment book.

Conclusion

Star Health’s Q3 FY26 performance was led by 23% GWP growth, a sharp rise in PAT to ₹449 crore, and an improvement in combined ratio to 98.9% as loss and expense ratios moderated. Over 9M FY26, PAT rose to ₹966 crore and the combined ratio improved to 99.8%. The next set of updates investors will watch include how the company sustains loss ratio discipline, its retail growth trajectory, and any further disclosures around portfolio mix and expense control strategies.