Star Health looks to raise Rs 400 crore for funding expansion plans

MUMBAI: Chennai-based Star Health Insurance is looking to raise Rs 400 crore from a clutch of private equity investors to fund its expansion plans, according to its chairman and managing director V Jagannathan.

Star Health is a joint venture between ICICI Venture, Sequoia Capital, Tata Capital Growth Fund, Alpha TC Holdings and Oman Insurance Company . “We have appointed JM Financial to raise this fund,“ Jagannathan said, adding that Star Health needs capital to grow its business.According to Jagannathan, last year the company grew its gross written premium income by 34%.He said the industry has the potential to grow at 25-30% a year.

Health insurance business accounts for about a quarter of the total non-life insurance business in the country. Penetration of the insurance industry has grown at a steady pace since non-state companies were allowed in 2000.

Penetration, defined as the ratio of insurance premiums to GDP, was 2.71% at the time. It rose to 4% at the end of March 2012. Nonlife insurance penetration was 0.60-0.78% over the past decade, despite health insurance growing at a 30% compounded annual rate over the past seven years.

Star Health has a capital base `651 crore. It is the first stanof .dalone health insurance company and is dealing with personal accident, mediclaim and overseas travel insurance. The company has moved away from writing mass government policy like Rashtriya Swasthya Bima Yojana. Jagannathan said that Star Health is writing mostly retail health policies, which account for 90% of its book. “We do not write much corpo rate business as it is not adequately priced," he said.

The government hiked foreign direct investment in insurance from 26% to 49% in March 2015.The company posted a profit of Rs 50 crore in the first quarter of the ` financial year. It came up with rights issue of Rs 75 crore earlier this financial year. The company operates through a network of 290 branch offices.