Star Health Insurance Company and Allied Insurance Company Consider IPO

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Star Health and Allied Insurance Company, backed by Rakesh Jhunjhunwala, will test the waters of the stock market with its first public offering amid high Covid claims and no excess underwriting.

The insurer has set a price range of Rs 870-900 per share with an issue size of Rs 7,249 crore in the upper price range.

The IPO, which opens on November 30, will be a mix of a new share issue and an offer to sell by existing shareholders.

From the promoter group, Safecrop Investments India llp, Konark Trust and MMPL Trust are seeking to reduce their stake in the company.

Other selling shareholders include Apis Groth 6 Limited, Mio IV Star, University of Notre Dame Du Lac, Mio Star, ROC Capital Pty Ltd, Venkatasamy Jagannathan, Sai Satish and Berjis Minoo Desai.

Jhunjhunwala will retain his approximately 14% stake in the company.

The public offering comes at a time when the profitability of the general insurance sector and autonomous health insurers are under pressure due to high Covid claims.

However, most insurers have seen an increase in new business premiums as policy sales have increased with increased awareness.

“In the first half of the current fiscal year, 28% of claims incurred and 41% of claims amounting to nearly Rs 1,750 crore were due to the Covid pandemic. There was no excess underwriting in the first half of the year, ”said S. Prakash, Managing Director of Star Health and Allied Insurance.

The insurer only saw 7.5 lakh claims in the first six months of the fiscal year while for the whole of 2020-2021 there were 8.25 lakh claims.

Prakash, however, said that with the increase in vaccinations, the impact of Covid claims is expected to decrease around the fourth quarter, which will have a positive impact on the bottom line.

In 2020-2021, the insurance company recorded a net loss of Rs 825 crore against a profit of Rs 268 crore.

Paytm’s recent low listing has raised concerns about the IPO’s pricing, but company management has said the insurer’s business model, market position and growth prospects will make it a problem. potential investment.

The public offering includes a reservation of shares worth Rs 100 crore for employees.

The proceeds of the new issue would be used to increase the capital of the company.

About 75 percent of the issue size has been reserved for Qualified Institutional Buyers (QIB), 15 percent for non-institutional investors and the remaining 10 percent for retail investors.

Investors can bid on a minimum of 16 shares and in multiples thereof.

At present, SBI Life Insurance Company, HDFC Life Insurance Company, ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance Company are the few listed insurance companies.


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