We're planning to raise Rs 200-250 crore from PE investors: V Jagannathan

Interview with Chairman and MD, Star Health and Allied Insurance

Star Health and Allied Insurance, which had recently tied up with two large public-sector banks, is looking to raise funds from private equity (PE) investors. In an interview with M Saraswathy, V Jagannathan, chairman and managing director of the company, talks about its future strategy. Edited excerpts:

The company has seen an improvement in its performance, posting profit in FY16 after it had reported a loss in FY15. What were the strategies that were taken to reduce losses?

We are a growing company; our management expenses have come down and the claims as well as the procurement cost remained at the same level. This has led to profitability. For this financial year, we have set a target of Rs 2800 crore of gross written premium.

You are planning to raise funds via foreign direct investment (FDI) or by increasing foreign partner's stake? Are you exploring other routes as well?

We are thinking of raising money through FDI route and let us see how things move. However, we might also raise Rs 200 crore to Rs 250 crore from PE investors. We are currently in talks on the matter.

Is group health a segment that you are writing business in?

Normally we do not underwrite group health. If at all we do it, we ensure we make profit. Our view is there is no point in underwriting something at a loss. Now, we do not have any loss-making segments.

Bancassurance (selling life assurance and other insurance products and services through banking institutions) is an area where you have entered into new agreements. What are the business opportunities you see here?

We have signed agreements with the Bank of Baroda and the Bank of India. Currently, we are testing the waters with respect to bancassurance. Banks are a big distribution channel and we are looking to utilise this channel. Earlier, we did not pay much attention to this area, but now we are going to explore it.

You were the first one to offer combination products in the insurance space. How is it performing?

We have signed up a deal with IndiaFirst Life Insurance, to sell combination products. This is a good product and provides life and health covers. If somebody falls sick, health cover takes care of the expenses and life cover takes care of hospital expenses. This is to ensure loss of a family's head will not be felt. It is a combination of health and life. Recently, we have done a soft launch of the product.

Ailment-specific covers are in vogue in the sector. Will you launch more products in this segment?

We cover bariatric surgery and also offer cover for after-diagnosis. We have also started offering cover for special (spastic) children. Wherever there is the opportunity, we will look into it.

You have been the first insurer to offer a cover for acquired immune deficiency syndrome (AIDS). How is the experience,  especially, since the sector considers this cover to be risky?

We are offering cover for AIDS. I do not know about the other insurers but for us the claims experience is comfortable. The product has been doing well.