Care Health Insurance: Financial Pulse of India’s Fastest-Growing Health Insurer

Care Health Insurance (formerly Religare Health Insurance) has emerged as one of India’s fastest-growing standalone health insurers. Despite robust topline growth in FY25, the company faced a steep drop in profitability, reflecting critical insights for investors tracking the unlisted market.

A) Company Overview

• Parent Company: Religare Enterprises Limited

• Established: 2012

• Regulated by: IRDAI (Insurance Regulatory and Development Authority of India)

• Key Stakeholders:

  • Religare Enterprises Limited(∼62%)

  • Union Bank of India(5.83%)

  • Trishikhar Ventures (∼15%)

Care Health Insurance offers a comprehensive range of retail and corporate health insurance products and has built a nationwide presence through banks, agents, and digital platforms.

 B) Business Model of Care Health Insurance 

Care Health operates on a risk pooling model, where it collects premiums upfront and pays claims when required. Understanding the health insurance business involves breaking down the premium collection, risk sharing, and expense structure. Here's how it works:

Step-by-Step Understanding:

1. Policy Sales and Gross Written Premium (GWP):

   • Suppose Care Health sells 10,000 policies in FY25.

   • Assume each policy has an average premium of ₹15,000.

   • So, GWP = 10,000 × 15,000 = ₹15 crore.

2. Reinsurance:

   • Insurance companies offload part of their risk to reinsurers.

   • If Care Health cedes ₹5 crore to a reinsurer,

   • Net Written Premium (NWP) = ₹15 crore - ₹5 crore = ₹10 crore.

3. Premium Recognition - Net Earned Premium (NEP):

   • Policies sold are not entirely recognized in the same year due to accounting norms.

   • Suppose:

     • 5,000 policies sold in April,

     • 3,000 in September,

     • 2,000 in October,

   • Only part of the premium is recognized in FY25.

   • Hence, NEP = Portion of NWP recognized based on policy tenure.

4. Expenses:

   • Operating Expenses: Rent, salaries, admin costs.

   • Commission: Agents/distributors earn commission per policy.

   • Claims: Payments made when policyholders raise claims.

5. Operating Profit:

   • NEP - Claims - Commission - Operating Expenses = Operating Profit

6. Investment Income:

   • Insurers invest collected premiums in debt/equity instruments.

   • The return from these investments adds to overall income.

7. Total Income = Operating Profit + Investment Income

8. Profit After Tax (PAT):

   • After tax outflow, the remaining profit is PAT.

Key Ratios to Track:

• Loss Ratio = Claims Incurred / Net Earned Premium

  • Indicates the proportion of earned premium used to pay claims.

  • Lower ratio = better underwriting performance.

• Combined Ratio = (Claims + Commission + Operating Expenses) / NEP

  • If this ratio < 100%, the company is making underwriting profits.

  • If > 100%, underwriting operations are in loss.

C) Revenue Model: How Care Health Earns Money?  

1. Gross Written Premium (GWP): This is the primary income source. Care Health’s GWP grew 21% YoY in FY25 to ₹8,318 Cr.

2. Net Earned Premium (NEP): After reinsurance adjustments, NEP stood at ₹6,733 Cr in FY25.

3. Investment Income: Income from shareholder and policyholder funds (₹368 Cr in FY25).

4. Other Revenue: Minor inflow from auxiliary sources, which sharply declined in FY25.

D)  Financial Overview (FY22–FY25)

1.  Premium & Revenue Trends (₹ Cr)

 2. Profitability: Rising Costs Impact Margins

Key Challenges:

• Claims rose faster than premium (↑33% vs ↑21%).

• Surge in commissions driven by aggressive distribution strategy.

• Fall in auxiliary income.

• Margins squeezed despite growing topline.

3. Balance Sheet Strength (₹ Cr)

✅ Strengths:

• Steady rise in assets and investment base.

• Shareholder investments grew to ₹2466 Cr.

• Sufficient reserves & surplus of ₹1,399 Cr.

⚠️ Concerns:

• Current liabilities rose 67% YoY, indicating short-term stress.

• High provisioning due to claims exposure.

4.  Cash Flow Position

Care Health managed to maintain positive operational cash flows despite falling profits. The cash balance doubled to ₹194 Cr in FY25, supported by strong premium collections.

E) Stock Performance in Unlisted Market

1. Share Price Trend (2021–2025) - Under Performer in the Unlisted Market

• Current Price: ₹162

• P/E Ratio: 101.89

• P/B Ratio: 6.65

• ROE: 6.53%

• MCap / GWP: 1.93x

2. Valuation Insights

The sharp fall in share price is driven by:

• Declining profitability and EPS halving in FY25.

• Market sentiment turning negative for unlisted insurers.

• However, the last quarter of FY25 was profitable indicating that if they continue to perform well, FY26 could be good year for them. On that basis valuation could be reasonable at CMP based on Mcap/GWP metrics. 

F) Comparative Financial Performance (FY25) of Health Insurers

(All figures in ₹ crore unless specified)

Key Insights:

Market Position:

• Star Health dominates in GWP (₹16,781cr), nearly 2x Care Health and 2.5x Niva Bupa.

• Care Health has higher claims and commissions than Niva Bupa but trails Star Health.

Profitability:

• Star Health leads in PAT (₹646cr), followed by Niva Bupa (₹214cr) and Care Health (₹155cr).

• Combined Ratios: All insurers are near breakeven (100-103%), with Star Health being most efficient (101.09%).

Underwriting Efficiency:

• Net Loss Ratio: Niva Bupa is most efficient (61.2%), while Star Health has the highest claims burden (70.3%).

Valuation (Mcap/GWP):

• Niva Bupa trades at the highest multiple (2.42x), suggesting stronger investor confidence.

• Star Health has the lowest multiple (1.53x) despite its scale, possibly due to higher claims.

Conclusion

Care Health Insurance is a high-growth health insurer that has struggled with cost control and margin preservation in FY25. While the topline is strong, the profitability squeeze, high commissions, and rising claims are red flags for investors.

However, with a solid asset base, growing cash reserves, and strong policyholder trust, a strategic pivot toward cost optimization could reignite long-term value.

 Final Take for Unlisted Investors:

• Strengths: Care Health boasts strong premium growth, a recognized brand, and a healthy investment portfolio that has steadily increased over the years.

• Challenges: The company currently faces margin pressures due to high claims, rising commissions, and a sharp decline in profitability. However, last quarter of Fy25 was profitable. 

• Investment Outlook: While the long-term fundamentals remain promising, short-term headwinds suggest a cautious approach. Investors should closely monitor margin recovery and claim containment before accumulating at the current price band of ₹160–₹180.

👉 If you want to know more about Care Health Insurance, visit: UnlistedZone Care Health Page

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