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Star Health Q4 FY25: Profits Drop, Claims Surge!
Result Updates - April 30, 2025

Star Health Q4 FY25: Profits Drop, Claims Surge!

Star Health Q4 FY25: Profits Drop, Claims Surge!

 

Despite robust double-digit growth in gross written premiums and a broader rural footprint, Star Health’s Q4 performance highlights rising claims expenses and a dramatic total collapse in net profit.

Summary:

Star Health and Allied Insurance reported a sharp decline in profits for Q4 FY25, recording an underwriting loss of ₹378 crore. The company’s combined ratio increased to 101.1%, climbing from 97.3% in the prior year, signaling a worrisome shift. Although the insurer saw a 10% YoY increase in Gross Written Premium and robust digital expansion, higher medical inflation and claim payouts led to significant financial strain.

A Disappointing Quarter for Star Health

Star Health and Allied Insurance Company Ltd. has reported a dramatic decline in its profitability for the fourth quarter and full year ended March 31, 2025. The standalone net profit plummeted by almost 100%, with the insurer posting an underwriting loss of ₹378 crore in FY25, compared to a modest ₹89 crore profit in FY24.
Profit after tax (PAT) fell to ₹646 crore under IGAAP and ₹787 crore under IFRS, down from ₹845 crore and ₹1,103 crore, respectively, in the previous year. The decline was caused by a rise in claims, healthcare cost inflation, and an increase in the combined ratio to 101.1%, surpassing the critical 100% mark. This suggests that the company’s claim payouts and operational costs exceed the revenue generated from premium collections.

Claims Surge and Expense Pressure

During FY25, the company paid over ₹10,350 crore in claims, a significant rise from previous years. Speciality categories such as orthopaedics, cardiology, cancer, and infectious diseases consumed close to ₹1,000 crores in payouts, with ₹2,000 crores paid out to senior citizens alone. The net incurred claim ratio rose to 70.3% under IGAAP and 70.7% under IFRS, indicating a surge in claim volumes beyond projections.
Operating expenses remained elevated at 30.4%, with administrative and distribution costs remaining high despite technology-led efficiency initiatives.

GWP Growth Strong, but Profitability Concerns Mount

Even though the bottom-line figures were disappointing, the company reported consistent growth in its top-line metrics. Gross Written Premium (GWP) rose 10% YoY to ₹16,781 crore under the new 1/n accounting norm and 15% to ₹17,553 crore without the 1/n adjustment. Retail health, contributing 93% of total GWP, remained the company’s core growth engine.
Renewal premium retention also stayed healthy at 97%, reflecting continued trust from existing policyholders.

Digital and Rural Expansion Pay Off

A highlight for the quarter was the company’s continued investment in digital and rural outreach. Star Health’s digital platform saw a 71% increase in fresh business through digital channels, 89% of policies were sourced digitally, and over 63% of renewals were done without human intervention.
Moreover, 51% of all insured people who lived during FY25 came from semi-urban and rural India. Notably, 60% of the retail claims settled were from these non-metro areas, aligning with Star Health’s aim of inclusive coverage.

Solvency and Investment Performance Remain Stable

The company demonstrated robust financial health with a solvency ratio 2.21x, well above the IRDAI requirement of 1.5x. This highlights a strong ability to meet sustained obligations over time. Additionally, total investment assets impressively reached ₹17,898 crore, reflecting a solid investment strategy. Furthermore, the investment yield experienced a marginal increase, rising to 7.8% from 7.7% in the previous fiscal year (FY24), highlighting the effectiveness of the company’s investment operations.

Management Commentary and Outlook

In a recent statement, Managing Director and CEO Anand Roy emphasized Star Health’s unwavering commitment to broadening its retail business, particularly in historically underserved regions. He outlined a range of forthcoming initiatives to promote customer-focused care models, innovative wellness programs, and accessible home healthcare services designed to enhance patient experiences.

Roy acknowledged the persistent challenges posed by rising inflation in healthcare costs, creating a more complicated landscape for service delivery. Nevertheless, he expressed confidence that the path forward lies in leveraging technology to drive efficiency and implementing prudent risk management strategies to navigate these economic pressures effectively. His insights paint a picture of a forward-thinking organization dedicated to adapting and thriving in a changing healthcare environment.

Conclusion: A Tough Quarter, But Not Without Silver Linings

Star Health’s Q4 and full-year FY25 performance presents a classic case of substantial growth marred by cost escalation and margin erosion. While the company’s leadership in retail health and strong solvency offer stability, sustained profitability will depend on effective underwriting, prudent pricing, and sharper cost controls. The year ahead is likely crucial as the company works to return to a healthier profit trajectory.

 

 

 

 

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U.S. Poised to Impose Tariffs on Imported Medicines: What It Means for Global Pharma

U.S. Poised to Impose Tariffs on Imported Medicines: What It Means for Global Pharma

 

The United States is preparing to apply tariffs on pharmaceuticals imported from abroad, with implementation expected in the next month or two. This move, confirmed by Howard Lutnick—a key ally of former President Donald Trump—is part of a broader effort to shift critical manufacturing back to American soil and reduce dependency on international suppliers.

Bringing Drug Production Home

The upcoming tariffs are aligned with a larger economic vision to rebuild the U.S. manufacturing base, especially in essential sectors like medicine and semiconductors. According to Lutnick, the U.S. government aims to apply a standard 10% tariff on imports from most nations, and far higher tariffs—up to 145%—on goods from China. This trade stance is designed to incentivize companies to produce goods domestically rather than overseas.
Lutnick also hinted that the current exemptions on certain electronic products may soon expire, suggesting a more comprehensive trade reset is underway. Pharmaceuticals are just the beginning.

Why India is Worried

India plays a massive role in global pharmaceutical supply, particularly when it comes to generics. Nearly half of all generic drugs sold in the U.S. originate from Indian manufacturers. This makes the proposed tariffs especially concerning for both Indian exporters and American importers.
Indian trade officials and pharmaceutical leaders have voiced their concerns, requesting the U.S. exclude medicines from the tariff list. They argue that India already grants tariff exemptions for dozens of life-saving drugs imported from abroad and hopes the U.S. will show similar restraint. Their fear: higher U.S. import duties will not only hit Indian revenues but also increase medication costs for American consumers.

The Ripple Effect on U.S. Healthcare

One of the most immediate concerns is the potential impact on healthcare affordability in the U.S. Generic drugs are a cornerstone of cost-effective treatment, and any increase in their price could have a direct effect on patients, insurers, and hospitals.
Health experts warn that tariffs might cause prescription drug prices to spike, affecting vulnerable populations the most. Insurance companies could adjust premiums, and government healthcare programs may face tighter budgets. Additionally, domestic producers may not be ready to fill the gap quickly, risking temporary shortages or delivery delays.

A Tense Global Trade Landscape

Introducing tariffs on medicine could raise tensions between the U.S. and its trade partners. Countries impacted by the policy may respond with tariffs of their own, potentially targeting American exports in unrelated sectors like agriculture or technology.
Trade analysts caution that this approach may weaken global cooperation on health and undermine trust in international supply chains. While the U.S. justifies the policy as a matter of national security and self-sufficiency, the global pharmaceutical system depends heavily on interconnected networks of production and distribution.

Economic Outlook and Business Concerns

Investors and businesses are watching closely. Stocks in healthcare and tech sectors have shown signs of instability as uncertainty around the scope of the tariffs grows. While the administration insists this shift will benefit the economy in the long term, the short-term disruptions could be considerable.
The logic behind the policy is clear: reduce external risks by building more at home. But industries and governments alike must now adjust to what could be a lasting transformation in how essential goods are traded and priced.

A Critical Moment

As the U.S. moves toward enforcing pharmaceutical tariffs, countries like India are scrambling to negotiate, businesses are re-evaluating supply chains, and consumers are bracing for possible cost hikes. Whether this strategy will lead to a stronger domestic pharma industry—or spark global friction—remains to be seen.

 

 

 

 

 

 

 

 

 

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