Star Health and Allied Insurance Co Ltd (NSE: STARHEALTH) Q4 2025 Earnings Call dated Apr. 30, 2025
Corporate Participants:
Unidentified Speaker
Pranay Premkumar — Adfactors PR, Investor Relations team
Anand Roy — Managing Director & Chief Executive Officer
Aditya Biyani — Chief Strategy & Investor Relations Officer
Amitabh Jain — Chief Operating Officer
Nilesh Kambli — Chief Financial Officer
Aneesh Srivastava — Star Health and Allied Insurance Company Limited
Analysts:
Unidentified Participant
Shreya Shivani — Analyst
Krishnan ASV — Analyst
Dipanjan Ghosh — Analyst
Prayesh Jain — Analyst
Madhukar Ladha — Analyst
Avinash Singh — Analyst
Varun Palacharla — Analyst
Presentation:
operator
Ladies and gentlemen, you have been connected to Star Health and Allied Insurance Company Limited’s conference call. The call will begin shortly. Please stay connected. Please note that you have been connected to Star Health and Allied Insurance Company Limited’s conference call. The call will begin shortly. Please stay connected. Ladies and gentlemen, good day and welcome to the Star Health and Allied Insurance Company Limited’s Q4 and FY 2025 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation.
Conclud should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pranay Premkumar from AD Factors PR Investor Relations team. Thank you. And over to you Pranay.
Pranay Premkumar — Adfactors PR, Investor Relations team
Good morning everyone. From the Senior management, we have with us Mr. Anand Roy, Managing Director and Chief Executive Officer, Mr. Nilesh Kambli, Chief Financial Officer. Mr. Anish Sribastava, Chief Investment Officer. Mr. Amitabh Jain, Chief Operating Officer. Mr. Himanshu Balia, Chief Marketing Officer and Mr. Aditya Biani, Chief Strategy and Investor Relations Officer. Before we begin the conference call, I would like to mention that some of the statements made during the course of today’s call may be forward looking in nature. Including those related to the future financial and operating performances, beneficial synergies of the company strategies, future opportunities and growth of the market of the company services.
Further, I would like to mention that some of the statements made in today’s conference may involve risks and uncertainties. Thank you. And over to you, Mr. Anand Royce.
Anand Roy — Managing Director & Chief Executive Officer
Thank you so much. And good morning to all of you. Thank you for joining the Stardent Insurance earnings call. It’s been a year of ups and downs for us and we closed the year FY25 on a positive note. And to give you the script, I’m asking requesting my colleague Aditya to take over and then we will take your questions and answers as well. Thank you.
Aditya Biyani — Chief Strategy & Investor Relations Officer
Thank you Anand. Good morning everyone and thank you for joining us on our Q4 and FY25 earnings call. Firstly, wishing everyone a very happy Akshay Tritiya. We closed financial year 25 by further strengthening our position as India’s largest standalone health insurer. We continue to lead decisively in the retail health insurance segment commanding a 33% market share nearly three times that of our nearest competitor. As per GI Consult data, this performance underscores our clear and consistent leadership in retail health a segment that remains a primary growth engine for the health insurance industry. Our team’s domain expertise in indemnity products combined with our strong distribution network and digital first approach reinforces our position as the preferred partner for customers seeking comprehensive health coverage.
In FY25, India’s general insurance industry reported a 6.2% growth in GDPI year on year. Health insurance segment remains the largest segment within the general insurance industry with total premium reaching 1.18 lakh crore in FY25, marking a 9% increase from last year. Retail health insurance segment recorded the fastest growth, expanding by 12% to 47,000 odd crores, accounting for 40% of the total health insurance premiums in FY25. The insurance sector has embarked on a path of comprehensive reforms aimed at realizing the goal of insurance for all by 2047. The introduction of the Master Circular has emphasized customer centricity, aiming to improve transparency, simplify insurance products and standardize claims processes.
These initiatives are designed to foster greater trust and accessibility for policyholders. Complementing these regulatory strides, The Union Budget 2025 has introduced pivotal reforms to fortify the insurance sector. The FDI cap in insurance has increased from 74% to 100%, a move anticipated to attract global capital and expertise. The GST Council also had discussions around rationalization of GST on insurance premiums. Currently, health insurance Premiums attract an 18% GST which possesses a challenge to affordability, particularly for middle income and vulnerable groups. Reducing or exempting GST on retail health insurance and micro insurance products will not only promote wider insurance adoption, but also align with the government’s vision of universal health coverage and strengthen financial protection.
Furthermore, the budget has placed strong emphasis on health care with increased allocation aimed at strengthening medical infrastructure, expanding coverage under schemes like Ayushman Bharat and promoting digital health initiatives. These measures are expected to enhance insurance penetration and awareness across the country. As a leading standalone health insurer, we have proactively aligned our strategies with these reforms. Our sustained investment in technology and customer centric solutions position us well to capitalize on the evolving regulatory environment and to continue delivering value to our stakeholders. As awareness and demand for retail health insurance continue to rise across India, especially in the semi urban, rural and smaller towns, we are well positioned to capitalize on this structural growth opportunity.
Coming to our business performance numbers for financial year 25, we would like to highlight that we’ll be presenting Our numbers without 1 by n to provide greater clarity. FY25 was a year of focused execution where we made measurable progress across key focus areas. Despite external challenges, we delivered strong growth in our core retail business, saw healthy traction in new products and continued to strengthen customer engagement. We saw strong growth in our fresh retail GWP which grew by 25% for the year. This success was driven by renewed agent productivity, sharper campaign and the acceleration of our digital channels.
A key product innovation this year was the launch of our Superstar Policy which has garnered more than 550 crores in financial year 25. This product offers 21 optional covers and unique features like Freeze youe Age and Limitless Care. It did become a top seller across digital platforms too. Its customization, wellness integration and competitive pricing set it apart in the market. We also made significant improvement in our claims Net Promoter Score which was driven by enhancement in service quality, faster turnaround time and technology based preauthorizations. While we recorded strong gains across many areas, there were some challenges that impacted our performance.
Our overall claim ratio stands at 70.3% driven by higher severity and frequency of claims, particularly with increased surgical intervention and hospitalization rates. The group Segment, though a smaller portion of our portfolio continued to face pressure, loss ratio rose to 89.8% from 77.3% last year. We strategically recalibrated our group segment strategy since quarter two financial year 25. The contribution of this segment to our total GWP has reduced to 7% as on quarter four financial year 25 from 9% as on quarter two financial year 25. In financial year 25, our overall GWP has grown by 15%. GWP grew by 22%.
Our annual GWP premium growth was at 12.5%. The fresh retail number of policy grew by 11%. Our renewal growth in number of policy grew by 5%. The overall number of policy growth stood at 6% for the financial year 25. This clearly emphasizes our focus on both volume and value growth. The average sum insured of new policies has increased by 10% to 16 lakh per policy 5 lakh and above. Some insured now constitute to 87% of our overall portfolio versus 83% in financial year 24. The share of long term policy has increased to 10% in financial year 25 versus 7% in financial year 24.
The ratio of fresh to renewal has improved to 23 is to 77 in financial year 25 from 22 is to 78 in financial year 24. Now moving on to our four engines of growth ABCD. Firstly, agency our agency channel continues to be the cornerstone of our business, contributing 82% to our overall gross return premium in financial year 25, agency fresh business growth stood at 16%. We would also like to highlight that for quarter four, fresh growth from this channel stood at 19%, thus reflecting the channel’s strong momentum and productivity. During the year we added 74,000 new agents, taking our total agent cost to 7.75 lakh.
Over the next three years, we aim to expand this network to a million agents. This expansion is a key lever in our strategy to deepen insurance penetration particularly across non metro cities and emerging towns. Coming to Bangka for the financial year 25 the Bangka channel contributed 7% to our overall business. With fresh business growing by 13% year on year, we are privileged to have an access to a robust network of over 20,000 partner branches offering us significant opportunities to scale distribution and enhance reach. Bank Assurance has traditionally been a strong distribution channel. The one by N Guideline and the Department of Financial Services views on this segment have led banks to concentrate more on refining their core banking products.
As a result, bank assurance growth had moderated with banks prioritizing regulatory compliance and core business focus over insurance distribution. Given the evolving health care needs and rising awareness, Indemnity health insurance products remain a core offering to the bank supporting both customer demand and business growth. On phosphate business this segment we are focusing primarily on serving micro, small and medium enterprises. In financial year 25, the corporate business contributed 3% to our overall portfolio with fresh business from this group segment growing by 21% year on year. This reflects our continued efforts to deepen engagement and drive value within the MSME ecosystem.
Our proprietary over the counter SME calculator has strengthened our association with agents who have been generating new business focusing on SME and MSME business segment. Coming to the Digital segment Our digital business comprises of our own direct to consumer online brokers and web aggregators which contributed to 8% in financial year 25 to our overall business. Our own direct to consumer channel contributed 72% to our digital business and the remaining 28% comes from online brokers and web aggregators. The fresh business from Digital Channel grew by 71% Coming to the financial performance for financial year 25 as per ISRS, our combined ratio in financial year 25 stood at 101.1% compared to 97.3% in financial year 24.
Claim ratios stood at 70.7% in financial year 25 compared to 66.5% in financial year 24. The expense ratio in financial year 25 stood at 30.4% compared to 30.7% in financial year 24. Investment income in financial year 25 has grown to 1260 crore versus 1171 crore in financial year 24. The yield for financial year 25 stood at 7.7%. Our investment assets have grown by 15.5% and has reached 17898 crore in financial year 25. For financial year 25, our profit before tax stood at 1054 crore versus 1480 crore in financial year 24. Our PAT for financial year 25 stood at 787 crore compared to 1103 crore in financial year 24.
Our ROE for financial year 25 stood at 9.5%. Solvency of the company as on March 31, 2025 was 2.21 times compared to the regulatory requirement of 1.5 times. I would just like to highlight some key highlights for financial year 25 we launched India’s first health insurance policy in Braille, making protection more accessible for the visually impaired. Star was rated as India’s most sustainable insurer in SMT Global’s 2024 assessment with an ESG score of 53 for financial year 24. Our NPS company score stands at 54 for financial year 25 versus 42 in financial year 24. Our claims NPS stands at 55 for financial year 25 versus 47 in financial year 24.
In terms of claims amount, our cashless claims lesser than 3 are 96% in financial year 25. Our claim rejection has come down to 10% in financial year 25 versus 13% in financial year 24. We have been consistently increasing our engagement with customers on prevention and business. Our preventive health checks have increased by 48% in financial year 25. Our home healthcare initiative expanded to 156 cities helping reduce hospitalization and lowering treatment cost. This is another step in making healthcare more accessible and affordable for we continue to yield savings in terms of claims output due to our anti fraud digital initiatives which are proprietary to startups.
In terms of savings, we are able to attribute 2.6% to the claims output. Our app has seen strong traction with total downloads reaching 1 crore as of financial year 25 up from 57 lakh in financial year 24. Our substantial investment in technology and automation enables us to achieve industry leading metrics for low operating cost and exceptional customer experience. We also took repricing on six products this financial year 25 constituting to around 60% of our portfolio. Looking ahead, financial year 26 marks a pivotal chapter in our journey and we are defining it as the Year of the Customer reflecting our strong Focus on delivering protection that is personal, relevant and seamless for every individual we serve.
Our roadmap is built on three strategic pillars. First is profitable growth driven by sharp underwriting. Focus on high return markets and stricter pricing discipline. Smarter cohort based pricing and deeper actuarial insights will help us balance margin expansion with affordability. Second is customer centric innovation. We will introduce tailored products for Gen 3 early earners, seniors and underserved geographies designed around life stage needs, health trends and regional insights. Third is digital first execution financial year 26 will bring a more seamless digital experience with real time claim, AI LED pre authorization and robust self service on our app.
This will enable customers to access care, wellness and support anytime, anywhere. Lastly, we are moving from a transactional to a transformational service model. Reference led growth, loyalty programs and faster turnaround time will be core to this shift. Every customer touch point will reflect our belief that health insurance must be personal, inclusive and future ready. Thank you so much and with all these updates we can now open the floor for question and answer.
Questions and Answers:
operator
Thank you very much sir. We will now begin with a question and answer session. Anyone who wishes to ask questions may press Star and one on the Touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shreya Shivani from clsa. Please go ahead.
Shreya Shivani
Yeah, hi. Thank you and good morning everybody. So my first question is on the claims.
I was also looking at the outstanding claims reserve and the ibnr reserves. I mean the combined number that you give out in the fourth quarter result that as a percentage of the claims paid is now 14%. This trend, this number used to be about 11 12% earlier. So I wanted to understand have we billed because I don’t have the breakup of ibn. So have we built higher IBNR reserves? Are we concerned about more claims coming through and does that mean that any improvement in loss ratio in the coming years is under a question right now? I mean how much can 70.3 move to in FY26 and 27? Some idea on that would be useful.
Second, I wanted to get an update from you on the common impanelement that GIC Council was working on. There was a media article recently that it’s it’s progressed a bit. If you can help us understand how that’s moving moving and how much benefit can it give to US and third, if you can help me understand the IFRS ROE is lesser than the IGAAP roe and I’m guessing it’s because the deferred acquisition cost got impacted by the long term regulation. Regulation on long term policy. But if you can help us understand that maths as well, it will be useful.
Thank you.
Amitabh Jain
Hi Shreya. An elevated, you know, frequency and severity that we observed in Q3, also largely led by carcinoma, obstetrics and gynec cases. So the, you know, preference for hospitalization over conservative treatments aided by easier access availability, early screenings and of course the cashless availability is, you know, all playing their role. So that is one of the reasons why we see those loss ratios. Yes, we have strengthened our results this quarter and that’s, you know, see we don’t have to go by one particular quarter. This business is not about quarterly numbers. It’s annual business. In fact, more than annual.
It can be, you know, a business which, you know, corrects over a period of time. So we are seeing some of those trends and we are ensuring that we have healthy reserves to meet any exigencies. On the GI Council common embalment, there has been substantial progress on that and there are various subcommittees and groups created which are now divided geographically to reach out to set of hospitals that we are targeting in the first round. And substantive talks have happened at various levels and we are seeing some early signs of some breakthroughs. I wouldn’t want to add further to that at this point in time and the GI Council spokesperson would be the right person to talk about that, but it’s a good progress and not only that, the industry is also trying to work out on various other measures on the fraud control perspective and as well as building better efficiency.
So I think all of this will play a big role in the coming year. On the ROE question, I would request Nilesh to Smart.
Nilesh Kambli
So SRI on the ROE part it is largely in life marginal reduction was because of the. Because when it comes to ifrs, the massive market of the investment portfolio is also confined. So there was a slight decline in. Q4 which had resulted in lower average in IFR compared to Indian gap.
Shreya Shivani
Yeah, but even the Deferred acquisition cost was 525 last year and that has come down. Is there something to read over there?
Nilesh Kambli
No, absolutely not. See, that’s a function of the one. By N because now the booking itself is not coming. So that’s, that’s nothing to do with.
Shreya Shivani
Got it, got it. And just a follow up on the first question on the loss ratio on building reserves. And I understand that you might have built reserves basis the trend you’re seeing right now. But any guidance or any outlook on how the loss ratios can move over next year or anything on that side would be helpful.
Amitabh Jain
So while we wouldn’t want to give a guidance measures we have taken on improving our fresh business. So our fresh business is really growing strongly now. We’ve done pricing corrections on the retail side at more than 60% of our portfolio. We’ve done pricing corrections on our tanker portfolio as well in the range of 20 to 40%. And along with that we’ve taken a lot of measures on micro segmenting our markets, focusing on profitable markets, ensuring that we are picking up risks more prudently. So some of those measures will also play out because underwriting efficiencies build over a period of time.
On the claim side, what we have done is that now we have digitized more than 50% of our hospital billings and those efficiencies will start to flow in. Also we are undertaking a complete transformation of our core claim system which will happen by Q2 that will help us again better efficiencies in claims processing, preventing leakage and better fraud control. So all of that I think will help us manage the situation much better going forward.
Shreya Shivani
Okay, and so the use you said 20 to 40% price hike, is it?
operator
I’m sorry to interrupt you. I would request you to rejoin the Q follow up questions. There are others. Thank you so much. Ladies and gentlemen. In order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow up question, please rejoin the queue. Thank you. The next question is from the line of Krishnan ASV from HDSC Securities. Please go ahead.
Krishnan ASV
Good morning. This has been an extremely disappointing performance. But I just wanted to understand kind of what you answered to the previous query as well. You said 20% to 40% hike. You have taken price corrections in the agency portfolio, in the banker portfolio. And this 70% loss ratio is despite all of that, we have been taking price corrections for nearly two, two and a half years now, starting from the family floater. I just want to understand how, how bad the current portfolio is. Is it largely back book underwriting which had gone wrong which is now causing all this pain? Have you, is there any reason to believe that your, that your, that, that your flow in the book that you have seen in the last year, year and a half is any better?
Nilesh Kambli
Yeah. Hi. So see, I think the price corrections that we have taken over the last few years have helped us to retain the loss ratios that we are today. We are an 18 year old organization and we are operating at currently at 68% loss ratio on the retail side and overall 70%. There has been an increase in loss ratios for all players in the industry. If you will compare. And I would say that amongst most others we are comparatively much better out. But having said that, we agree to your point that the loss ratio has elevated because of reasons which Amitabh had mentioned in the earlier answer as well.
How confident are we on maintaining the overall loss ratios and overall combined ratios? We are quite confident because we have seen significant green shoots in our new business growth in the amount of the loss ratios of the different cohorts that we monitor. So there is health insurance business is undergoing a lot of transformation and we have to accept that there are multiple interventions from various regulatory bodies, from various government bodies. So this is a period of some kind of transmission which the industry is going through. And this is something that we have to live with in the short term.
But the corrective measures that we are taking, we believe that in the long term we will be much better off.
Krishnan ASV
Understood. The other thing is you mentioned both severity and frequency which have seen structural changes. Can you just walk us through or quantify this a little bit for us? What do you see on ground today vis a vis what you expected say three years back, both in terms of frequency as well as in terms of severity? Because what we find is incidence rates have gone up. But just want to understand if you could kind of help us quantify that. What did you expect say three years back? Where is the reality today?
Amitabh Jain
So on the frequency the increase is, you know, still in single digits, but it is closer to, you know, 10%, I mean on the higher side of the single digits. And that’s why that’s a bit of a increasing trend than what we have earlier observed in the previous year. So wouldn’t be able to comment exactly on 3 years but used to see not more than 3 to 4% increases in frequency earlier. So that’s the change. And on severity, yes, while the market continues to see medical inflation at 15% plus, but we are holding that to well below 10% as of now.
And in fact ours would be one of the better controlled book as far as medical nutrition is concerned.
Krishnan ASV
I mean, I’m sorry to interrupt you. I think I find that this is a misconception. I don’t think anybody in the industry is close to 15% whether it’s a listed company, whether it’s an unlisted company, whether it’s a TPA listed tpa. All of them are actually claiming that medical inflation is actually in mid single digits. Right. So I can’t understand this misconception around why you believe the industry is at 15% and you are doing any better.
Amitabh Jain
So medical inflation in terms of what the industry is maintaining versus what we see actually happening in the hospitals. That’s what I’m talking about. Any published number on medical inflation, if you come across it talks about, well about anywhere between 10 to 15%. I’m not commenting on where what the insurance industry is maintaining it. Obviously all the players are doing their bit to keep it at sustainable levels.
Krishnan ASV
Okay, so you’re saying severity is not a big problem. At least our health has controlled severity far better than the industry. That’s your assumption today.
Amitabh Jain
It is not to the level that we want to. I mean, obviously that’s why we are not seeing the impact that we want to see on the loss ratios. Right. So I’m not saying that it is at a level that we want, but it is much lower than, you know, what the overall industry trends are, even within the industry. I think while you are saying, and I am going by what you are stating, but in terms of our numbers, I think we are maintaining at a number which is better than most other players.
Krishnan ASV
Thank you. I do have a suggestion, if you don’t mind, a constructive suggestion. When things do go wrong, I think it’s better not to place smoke and mirrors. You might as well own up. I think the deck doesn’t help. Unfortunately. Whatever changes you have done in the deck doesn’t really help. I think you probably should be upfront because you are the market leader. It helps when you own up where things went wrong. Thanks.
operator
Thank you. We’ll take the next question from the line of Dependjan Ghosh from Citigroup. Please go ahead.
Dipanjan Ghosh
Hello. Am I audible?
operator
Yes, sir. Please proceed.
Dipanjan Ghosh
A few questions from my side. You know first, obviously, I mean when you took the price hike first time around, I think the quantum was high. Also it led to adverse selection in hindsight after 24 months almost. So now, given that you have been taking price hikes for the past five to six months, just wanted to get some sense of the quality of persistency. Now in terms of over the last few months where the cohorts have taken price hike, you would have done some analysis of the customers who have been retained versus those who have probably folded out.
So just some qualitative color on the cohort that remains with you versus the trends that you saw in FHO once you are taking the price for the first time this time around. And second, what would be the policy consistency level after the price hike? The second question would be, you know, on this entire rising claims ratio for FY25, if you can split it between sho and non sho, I mean we’ll get the data in the disclosures, but it would be great if you can kind of split that up. And two more small data keeping questions.
One, you know, given that now your new business growth has revised, would you be categorical in explaining the gap between less than three or four year bucket claims ratio versus more than that? I mean that will give us some color in terms of how to extrapolate this new business growth to claims ratio trajectory. And lastly, on the claims frequency, what would be for you guys? I mean you quoted that it has been increasing at 5.6%, but what would be the annualized number?
Nilesh Kambli
So persistency. Let me just take that question first. When we took the price correction in the traditional manner three years ago, two years ago in fho, we found that customers obviously every time we take a price correction, we have always articulated that 5 to 6% of consumers do drop off. Now, who are the consumers that dropped off earlier and who are the consumers that drop off now? In the latest manner in which we have taken the price correction, There’s a big difference that we are noticing because this time we have done in a little bit more nuanced fashion where we have given discounts to customers who have had better claims experience.
So we are seeing a much better persistency on consumers who have not made claims because their price corrections have not been that much higher. So I would say that the FHO price correction last year, last time was this time we are getting much better results as far as underwriting standards are concerned. As far as the loss ratio of FHO is concerned, it continues to be on the higher end of closer to 80 odd percent. And we hope that with this price correction that will come down 2 to 3 percentages. So we have to understand that every price correction that we take actually takes 12 months for it to fully get reflected on the books of the company and only then the whole MEP earnings comes in and then the future months reflect the loss ratios of that particular book.
So it is a long process, but it is something that we have to be more proactive. And that’s why when we made our opening remarks, we have told you that we have taken price revisions in almost 60% of our products. And we expect that given the way the industry and the markets and also to some extent the guidance we have been receiving from the regulator, we will be taking a soft annual price increase to keep up with the medical inflation that we notice on our books on the claims frequency. I think Amitabh, if you want to add to it.
Amitabh Jain
So as I told you in the last question, basically we are experiencing higher frequencies and the annual increase is upwards of 7%. And that’s primarily led by, as I told earlier, you know, movement from secondary to tertiary care hospitals. Also more preference for hospitalization vis a vis conservative treatments, you know, more accessibility and screenings happening. You know, we have seen a lot of increase in cancer frequency because early screenings are happening now. So some of those trends have come in and obviously that will take its time to settle in another new sort of benchmark for us to price.
Because all of these, when they show up in the data and actuarial methods kind of go through those trends and then build that as part of a pricing. So some of those corrections happen with time and we hope that that will settle at a level where we can sustain at this pricing and the future pricing corrections.
Dipanjan Ghosh
I’m sorry, the question on claims ratio in the newer cohort of less than three, four years versus others, what would be the gap? I mean, and has that materially changed?
Amitabh Jain
Deepanjan, we will take this question offline on the fresh and the renewal vintage loss issues.
Dipanjan Ghosh
Sure. Thank you.
operator
And all of us, thank you. The next question is on the line of Praish Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah, hi, good morning. Just trying to connect the dots out here. You had taken a family health Optima price hike of 25% a couple of years back and at that time we were told that the benefit of that will start growing in a year’s time. And while we haven’t seen those benefits anytime now, you are saying that you’ve taken a price hike and over and above that you will be giving discount to good customers. So from a claims loss ratio perspective, does even the current price hike benefit benefit any benefit us in any, in any form in terms of loss ratio going ahead?
Amitabh Jain
Yeah, I mean see that price hike helped us to an extent and we managed the book in the last one and a half years based on that. What we realized is that the way some of the price hikes are happening also leads to challenges in retentions of good risks which are non clearing customers. So that’s why the importance to have you Know cohort based pricing where you can incentivize non payments. And that’s what we have done in the recent change that we did. And since it has been done very recently, obviously the impact will come only next year.
The price hike, the latest hike happened only in January for fho. So that will take its time to build. But we are seeing good trends as far as retentions are concerned in that particular, particular hike.
Prayesh Jain
Honestly, the only point that we have been trying to ask is the previous benefits have not come in. And what kind of confidence do you have that these price hikes will help you to maintain loss ratios or even improve for that matter. And you know, just another question on that. At the beginning of this year at 25, you had guided for 100% improvement in combined ratio, 50 basis points on loss ratio and 50 basis points on the opex. None of them seems to have come through in this year. What should we think about it from FY26 or from a longer term perspective, how should we think about loss ratios and combined ratios going ahead?
Nilesh Kambli
So see, we have guided for 50 basis points improvement in Opex and 50 basis points on claims on the Opex. We have achieved that. But of course because of the one by n reporting the data, you know, optically it may not be available but we can. If you look at the, you know, the overall GWP reporting basis, it is definitely something that we have worked on. And as you know there is, there has been a consistent improvement in OPEX every year, year on year. So we continue to focus on that through our investment in tech and automation.
We believe that that will continue to happen in the future years as well. As far as loss ratio is concerned, of course this has been a bad year for us. We saw that the loss ratio deteriorated by 400 basis points to where we want it to be. We have told you that the loss ratios are now broken into three different cohorts. There is retail, there is group and there is the bank assurance piece. On all these three areas we have taken corrections and we are quite confident that going forward loss ratios will only improve from here.
And we have been seeing that trend for the last three quarters. Every quarter. There has been an improvement over the previous quarter but I don’t want to give any guidance for the future. We have also guided for an FY28 medium term kind of vision where we would be doubling our top line and tripling our profit on the IFRS basis. We continue to stand by that guidance.
Prayesh Jain
Just one last question. Could you please mention the loss ratios on the renewal and the new business separately for the retail book.
Nilesh Kambli
Sure. We do that in the offline and I can tell you that we are very, very encouraging and we can share that with you offline.
Prayesh Jain
Thank you so much.
operator
Thank you. We’ll take the next question from the line of Madhukar Lagda from Nuvama Wealth Management Ltd. Please go ahead.
Madhukar Ladha
Hi. Morning. So just on the loss ratio they continue to be elevated and even from a nine months to a full year the loss ratios have only increased. So up nine months this was about 340 basis points and now it’s again, again up to sort of 380 basis points. So you know, on a year over year basis when should this trend start looking better where this is actually sort of coming off? And in the group business especially there should be some group business should be an easier fix. So their loss ratios are elevated. So what sort of improvement can we build at least on the group side that will be useful to know and just data keeping questions, you know, because the deck, the deck has changed substantially and the consistency of information is lost, you know, every sort of quarter.
So while you’re given a lot of channel wise fresh business growth but you know, I tried to do some back calculation. The total fresh business for FY25 is about 40 billion, is that correct? And finally if you give your ABCD split and GWP split between retail and group for FY25 that would be helpful.
Nilesh Kambli
Yeah. Madhuka, to your second question, your numbers are somewhat correct in terms of the volume of business that you are projecting of 40 billion fresh. I think on the loss ratio side we have, you know, over last year there has been a 400 basis point, you know, increase for the full year which was 66.5. This year we landed up at around 17.1. So I think there’s no, you know, there has, it has been a bad year in terms of the elevated loss ratios. What we are trying to articulate here is that quarter on quarter basis, if you look at the previous quarter versus this quarter, we have seen improvements in loss ratios and we believe that all the interventions that we have taken will improve the loss ratios further going ahead.
So we are, you know, we remain to be very, very positive. Loss ratios increases has multiple reasons but there is no point in discussing those reasons again. I just want to tell you that the steps the company has taken in terms of pushing new business in terms of underwriting strategies of retail versus group as well as provider management that we are doing with our hospitals, I Think we are quite well placed to have better outcomes in the future years.
Madhukar Ladha
And any comments on the group side? Because group should be more easily fixable and the loss ratios of there have also increased substantially.
Nilesh Kambli
Absolutely. So group, you know we have. Our ratios of group business has come down significantly. We have been very highly selective on the group business from last three quarters and loss ratios will come down on that since we are writing better business being very very selective about it.
Amitabh Jain
So Madhukar, we have been showcasing our overall loss ratio split into retail and group. Retail obviously stood around 68 odd percent. And we have consciously recalibrated our group business since quarter 2 25. And from quarter 126 our large group business contribution will go down in a big way from our top line and earn premium. So obviously this will help our coming year. Our retail fresh growth along with the price hike taken Is of almost 60 65% of our portfolio. And this will be followed by our annual repricing also. So the full impact on NEB due to 1 by 365 accounting will at least take probably a 12 month period.
But we are very confident that all the proactive actions which we have taken in the last six months will show good results in the coming days. Fresh growth has been very encouraging and that also will be a very big point. Coming to the retail and group split just in quarter four our retail contribution to the total premium was 95% and the group was only 5%.
Madhukar Ladha
And what is that number for the full year?
operator
I’m sorry to interrupt you. I would request you to rejoin the give follow ups. Thank you. We’ll take the next question from the line of Avinash Singh from NK Global. Please go ahead.
Avinash Singh
Yeah. Hi, good morning. Thanks for the opportunity. The question is more I would say broader level. I mean if we see again I. Am going back to the pre Covid era to now almost five odd years. And if we look at the industry level of course whatever a change in the frequency and severity is known. I mean partly due to hospital. Now my question is very kind of a blip. Now if we see even not you your peers also when the sort of a growth slows down there is a reasonable spike in claims cost and the claims this will have been going upward. Now in this all this changes in frequency and severity. I mean is there a fundamental fixed.
I mean because at the end of the day even retailer group it is all about the health care cost of frequency and severity. Is there a fundamental change that you are witnessing in population cohort in terms of you Know the lifestyle or chronic diseases. I mean how have been a media term trend of pre Covid post Covid. I mean are these spikes led by say a typical dengue, malaria or chikungunya kind of a thing that is seeing extreme rise or is it that okay, a cardiac care, cancer care, these kind of lifestyle chronic diseases because the both will kind of have a different repurpose and pricing impact if there’s a kind of a structural change in you know, a morbidity profile of your cohort, whether due to being the pollution or whatever.
If there is a kind of other the outcomes in off frequency in cardiac cancer and all these life threatening diseases, life studies including then probably this is going to be a chicken and egg scenario where I can price hike anesthesia watching. So what has been. I mean what if you analyze the data over five years because of course you are the largest one what kind of a thing which bucket of you know, the morbidity has changed, seen a bigger change? I mean is it the lifestyle chronic diseases or it is just some spike coming just because of some, you know, incidences of you know, the summer heat or chikungunya then kind of thing.
Thanks.
Amitabh Jain
So for the quarter, if you’re talking about. We’ve seen more incidents on the surgical interventions, not so much on the medical and for the year also while there’s been increase both on medical and surgical, but we’ve seen a larger increase on the surgical incidences and this is led by more of cancer gynae, obstetrics and urological issues. Whether it’s a structural change or not, we will come to know only with some passage of time because we’re still observing some building up and trend changes. So whether it is reset to a new normal is something that we know and usually actuarial pricing is based on trends over a period of time and that’s what it takes into account when we do any repricing of a portfolio.
So you know, whatever changes in frequency or severity that happens, that is generally accounted for in all pricing changes that we undertake. Now sometimes there could be some surprises in that when the expected frequencies go up more than the actuary estimated while pricing the product. So that could be one of the issues. But largely whenever a reset happens, mostly it settles down in a year or two. Generally that’s the trend. We will continue to monitor this very closely and ensure that we are taking. Adequate. Precautions on both sides. One on the underwriting side, as we said, we continue focus to ensure that we are micro segmenting our risk. We are focusing on the profitable cohorts taking due precautions in whatever we underwrite. On the other side, as I said, we continue to negotiate and ensure that we get the best pricing arrangements at the hospitals and ensure that our ability to leverage on claims analytics with all our data, all our last 18 years of understanding of this business helps us stay ahead. So that’s what the effort is.
Nilesh Kambli
So Avinash, just to add to that, I mean to what Amitabh said, we have to understand that health insurance is a business that is almost, you know, it is not a, it’s not an optional business. I mean not an optional coverage anymore. People have to buy health insurance and we are glad that that kind of understanding has come into the population and more and more awareness, more and more, you know, people are coming forward to buy health insurance and that’s why all health insurance companies continue to grow. Now how can this growth be profitable and how can this growth be, you know, sustainable is something that we have, you know, that is the challenge we are facing for the last two years.
But yes, people buy health insurance because they want to go for higher quality of treatment. And there are multiple studies which shows that people who have health insurance have better health outcomes in the long run because obviously they are, they seek timely treatment which otherwise they would not have. So I think it is something that is evolving. What we would like to tell you is that we are studying these trends and we are definitely pricing products and restructuring our underwriting to make sure that we stay ahead of the curve and not play a catch up game at all times.
Avinash Singh
Okay, thank you.
operator
Thank you. The next question is from the line of Varun from Kotak securities. Please go ahead.
Varun Palacharla
Hope I’m audible. I just had a question on the divergence between fresh and overall growth that we have been reporting. So if you look at fresh growth, retail growth, I’m seeing that is about 25% for the year and that translates to about 33% for the quarter. So when we look at renewal rates, they seem to be on a decline, particularly in 4Q. Is there anything off in the base that is causing this decline? Like I think it’s about coming to close to 90% instead of 95, 97% is what is there for a full year. No.
Amitabh Jain
So Varun, let me just reassure that the 25% growth is on without one by N coming to the renewal. I had already mentioned that, you know, the renewal growth has in value terms has been 12.5% and on the volume side it’s been on 6% on the number of policies. So the growth has been on volume and value both.
Varun Palacharla
Yeah, that’s. I think the number you’re talking about is for a full year. I’m saying in four Q is a trend of sharp decline in renewal rates. Are you seeing the same or is there something else?
Nilesh Kambli
Q4 also continues to be 19% for us.
Amitabh Jain
Yeah.
Varun Palacharla
Okay. And in terms of investment yield, there’s a slight moderation in investment yield. I think bond markets have rallied. So what is the reason for this alteration?
Aneesh Srivastava
Hi. Hi Varun, this is Anish here. See if you would look at the book. What we have done in last, so to say one and a half years is that as our solvency levels have stabilized we have started building equity books. So equity book was 6.7% of the AUM at the beginning of the year. This is at the end of last quarter of last financial year and today this stands at approximately 15%.
So what happens is that if we get an opportunity in between to book profits, that gets counted. Declining yield is not a good scenario. But we are fully invested as far as fixed income is concerned. And I don’t think that we would be needing to buy too much of incremental fixed income except for the maturities that would come in. So now if you dissect the last four quarters, we have booked in 33 crores kind of investment profit. Book profit, second quarter was 85 crores and third quarter was 55 crores. Intent of booking profit was that there had been exhibitance in the market and hence we had pared on some exposures.
We were not expecting that we would get reinvestment opportunities so quickly. But fortunately we got in the fourth quarter reinvestment opportunities and we have scaled back our exposures. That’s the reason why in fourth quarter we have just booked 11 crores and we have not booked large quantum because that was time when we were de increasing our equity investment book. So because of 11 crores of book profit only as compared to 85 crores and 55 crores in the previous quarters you are seeing that overall investment income for fourth quarter is low. But what you can look at is that full year, full year is 281crores investment income.
Out of this 184crore is the book profit and overall Investment yield is 7.8%. 7.8 actually is a good year from insurance. So this is where we stand and what I would say is that given the fact that we have equity book now and we may not very consistently book profits, we would see as and when There are opportunities in the market we will tear down, we’ll pare down equities or book profits. Else there may be some variability. But from the fixed income perspective, I don’t think that there would be any variability. 15% of the portfolio would be a function of how market behaves.
So that’s the reason why you are seeing this. So to say, relatively lower income as compared to the previous quarters. But if you look at 7.8% kind of a yield, this is I think the highest in last four years. So this is where we stand and I think we continue to do well as far as this investment book is concerned.
operator
Thank you sir. Ladies and gentlemen, due to time constraint, that was the last question for today. I would now like to hand the conference over to Mr. Nilesh Kamli for closing comments. Thank you. And over to you sir.
Nilesh Kambli
Thank you everyone for joining the call. Early morning, we are geared up and confident for a profitable FY26. Thank you very much.
operator
Thank you members of the management. On behalf of Star Health and Allied Insurance Co. Ltd. That concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.