Star Health sees declining number of claims
The health insurer has fixed price band of `870-900 for its `7,249.18-cr IPO, which will open Nov 30 and conclude on Dec 2; Rakesh Jhunjhunwala currently holds 17.5% in the company
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Mumbai: There has been a gradual increase in number of claims at the standalone health insurer, Star Health and Alliance Insurance Company due to Covid. The average claim settled by the insurer during that period was also very high. "However, the insurer is now witnessing favourable decrease in claims paid. Now, it is much less than what we had paid in the pandemic period," said S Prakash, MD, Star Health and Alliance, in a media interaction on Wednesday.
Average ticket size of premium for the insurer is currently at $200. However, he hoped that it will be moved up to make it more viable in days to come. The insurer has fixed a price band of Rs870-900 a share for its Rs 7,249-crore initial public offering, which will open on November 30. The three-day initial public offering (IPO) will conclude on December 2. The bidding for anchor investors will open on November 29. The IPO comprises fresh issue of equity shares worth Rs 2,000 crore and an offer-for-sale of up to 58,324,225 equity shares by promoters and existing shareholders.
Prakash said that health insurance numbers are comfortable now as the business at his company has grown by 28 per cent and the premium income currently stands at Rs5,000 crore. The company had done a business to the tune of Rs6,500 crore last year. In the first half of the current fiscal, the insurer has settled claim worth Rs 4280 crore, out of which Rs 1750 crore was claim related one. Excluding Covid claim, the company's loss ratio stands at 65 per cent.
Rakesh Jhunjhunwala currently holds 17.5 per cent stake in the company. Those offering shares through the offer-for-sale are promoter and promoter group — Safecrop Investments India LLP, Konark Trust, MMPL Trust — and existing investors — Apis Growth 6 Ltd, Mio IV Star, University of Notre Dame Du Lac, Mio Star, ROC Capital Pty Ltd, Venkatasamy Jagannathan, Sai Satish and Berjis Minoo Desai. The public offer includes a reservation of shares worth Rs 100 crore for employees.
At the upper end of the price band, the initial share-sale is expected to fetch Rs 7,249.18 crore. Proceeds from the fresh issue would be used to augment the company's capital base.
About 75 per cent of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors. Investors can bid for a minimum of 16 equity shares and in multiple thereof. Star Health, leading private health insurer in the country, is owned by a consortium of investors like Westbridge Capital and Rakesh Jhunjhunwala.
At present, SBI Life Insurance Company, HDFC Life Insurance Company, ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance Company are the few insurance companies which are listed on the stock exchanges.
Kotak Mahindra Capital Company, Axis Capital, BofA Securities India, Citigroup Global Markets India, ICICI Securities, CLSA India, Credit Suisse Securities (India) Private Limited, Jefferies India, Ambit, DAM Capital Advisors and IIFL Securities are the merchant bankers to the issue. The equity shares of the company will be listed on the BSE and NSE. Talking about USP for investors in the company's IPO, Prakash said that we are doing commercial service with service point of view.
