Care Health Insurance Limited

‘’Smart Baniye”
“Care Health Insurance se apni family ki health secure kariye’’

www.careinsurance.com

Report Date: March 24, 2021

Care Health Insurance is the health insurance arm of Religare Enterprises Limited
Report Number: Annual/2021/04 (REL) that commenced business in July 2012. It is a specialized Health Insurer
offering health insurance services to employees of corporates, individual
ISIN: INE119J01011 customers and for financial inclusion as well. The name of Religare Health
Status: Unlisted EQ Insurance Company Ltd has been changed to Care Health Insurance Ltd w.e.f.
Face Value: ₹ 10 per share
Market Capitalisation:
August 19, 2020. It has made significant progress within a short period and is
12,552.16 Crores already operating out of 156 offices with an employee strength of 6000+. It
currently has three major shareholders – Religare Enterprises Limited (REL), Union
Bank of India and Corporation Bank. ₹ (in Crore)

Metrics FY2020 FY2021E FY2022E Y-O-Y Change

Share-holding Pattern:
Net worth 1944.58 2430.73 3038.41 25.00%
PAT 261.95 327.44 409.30 25.00%
Basic EPS (in ₹ per share) Shareholding
103.24 PatternKedaara
129.05Capital , 161.31 25.00%
18.00%
Diluted EPS (in ₹ per share) 100.70 125.87 157.34 25.00%

CARE HEALTH INSURANCE LIMITED

Book Value Per Share (in ₹ per
716.82 845.87 1007.18 18.00%
share)
Union Bank of
India, 6.00%

P/B Ratio 4.19 3.55 2.98 -15.26%

₹ (in Crore)
Retial, 4.00%

Metrics FY2020 FY2021E FY2022E Y-O-Y Change

Net worth 1944.58 2430.73 3038.41 25.00%

PAT 261.95 327.44 409.30 25.00%
Religare Enterprise
Basic EPS (in ₹ per share) 103.24 129.05 161.31 25.00%
Limited, 72.00%
1
Diluted EPS (in ₹ per share) 100.70 125.87 25.00%
57.34

Book Value Per ShareShareHolding

(in ₹ per Pattern Percentage Holding
716.82 845.87 1007.18 18.00%
share) Religare Enterprise Limited 72.00%
Kedaara Capital 18.00%
P/B Ratio
Union Bank of India 4.19 3.55 2.98
6.00% -15.26%
Retial 4.00%

Leadership Team:

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 The erstwhile promoters of REL Mr Malvinder Mohan Singh and Mr Shivender
Mohan Singh resigned as Directors of the Company on February 14, 2018 post
which the Board of Directors was reconstituted and strengthened by inducting
professionals having sound credentials, expertise and competence in their
respective fields. The shares held by the promoters were reclassified into the
Public Shareholders category with the stock exchanges in January 2019. CHICL is
currently being headed by Mr Anuj Gulati

Investment by Kedaara Capital in 2020:

 The Company on 2nd June 2020 completed the allotment of Equity Shares on a
Preferential Allotment basis to existing shareholders and Private Placement basis
to M/s Trishikhar Ventures and Kedaara Capital Fund II together known as
Kedaara Capital in order to raise ₹ 567 Crores. The objective of this capital raising
is to maintain the solvency position of the company and for the expansion of
business.
 The promoter company Religare Enterprise Limited (REL) has utilized ₹ 153 Crores
from its divestment of stake, towards a full and final settlement of loan of Axis
Bank and has become external debt-free. Post this retirement of external debt
the company is said to have resolved most of the legacy issues and is on a path to
revival for both the promoter company and its subsidiaries. The company has also
mentioned that its healthcare insurance business which is the core business of
CHIL is growing at a CAGR of 50% over the past 3 years and is expected to grow
significantly in the current financial year due to the spread of pandemic COVID-
19 which has created a huge demand for the need for health insurance in India.

Preferential Allotment/Private Placement as of 2nd June 2020:

No. of Shares allocated Price per Share Amount Paid

Name of Subscriber
M/s Trishikhar Ventures LLP
13,19,60,940.00 37.89 5,00,00,00,016.60
M/s LKP Finance Limited 6,40,995.00 37.89 2,42,87,300.55
Mr Arvind Bansal 16,807.00 37.89 6,36,817.23
M/s Swarnim Multi
16,807.00 37.89 6,36,817.23
Ventures Pvt. Ltd.
Kaushal Agarwal 16,807.00 37.89 6,36,817.23
Total 13,26,52,356.00 37.89 5,02,61,97,768.84

Industry Overview:

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  Indian health insurance market is a growing market and has a registered a market
size of ₹1,441 billion in
 FY 20, up by 26.9 % from FY 2019 according to the General Insurance Council
report.
 Amidst the pandemic in 2020, the health insurance sector grew 40% YoY as
people started asking for health insurance policies to cover COVID.
 Out of all health insurance service providers in India, that is Public Sector
Institutions, Private Institutions and Stand-alone insurers, Public Sector
institutions have the lion’s share having 53% of the market share and Private and
Stand-alone insurers stand at par with each other concerning market share. In
terms of retail policies, Stand Alone Health Insurance Companies (SAHI) have the
biggest share of 44%, CHIL is a SAHI and ranks number 6 overall and number 3 in
Gross Direct Premium.
 The health insurance industry is at an embryonic stage, with roughly 25% of the
population under its coverage. There exists a huge potential for growth and
penetration of health insurance to a larger population.
 Insurance reach is still low in India. Overall insurance penetration (premiums as a
% of GDP) in India was 3.69% in 2017, providing a huge underserved market.
 Out-of-pocket healthcare spending still stands at around 65% indicative of a huge
market that is yet to be explored with innovative products and use technology
and unique marketing.
 In September 2018, National Health Protection Scheme was launched under
Ayushman Bharat to provide coverage of up to ₹5,00,000 to more than 100
million vulnerable families. The scheme is expected to increase the penetration
of health insurance in India from 34% to 50 %.
 In wake of the pandemic, IRDAI has allowed life, general and health insurers to
offer coronavirus-specific short-term health insurance policies for periods ranging
from 3 to 11 months in both individual and group categories.
 The industry is witnessing a rise in venularization and voice-enabled search and
services.
 Simplicity in product design and the overall buying experience is one of the
biggest category trends in 2020 along with consumers embracing a DIY approach
to financial planning.
 Demand for health insurance products like ‘Corona Kavach’ is increasing for the
18-30 age group.

Industry| Insurance

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 Reach:
93% claim 6.95 lac 6000+ 1.19 lac Cashless
9450+ 156 pan- claim approval
700 locations settlement claim employee health
hospitals ratio settlement India strength check- in 2 hours
offices ups

Care prides itself in its promoter’s expertise in Healthcare and Retail pharmacy businesses such as
Fortis Hospitals, SRL diagnostics and Religare Wellness.

Retail Health Insurance

Basic
Critical Issues Wellness &
Hospitalisati on (Care)

Insurance

Top-Up Coverage
Post-cardiac High Sum
event Insurance (Care assured Option (Care
Heart) Advantage)

International Travel Insurance

Insulin
Maternity Insurance Insurance for
dependent
diabetesPED
(Care
Freedom)

Group Health Insurance

Financial Dashboard

Financial Dashboard

Premium from Direct Business Net Premium Earned 1626.02

Written
2388.98 1265.75

821.87
1825.57

1091.61 527.2

726.07
359.67
503.32 229.04
275.8

2015 2016 2017 2018 2019 2020

2015 2016 2017 2018 2019 2020

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 Net Worth 780.98

700.88

594.18
524.75

2017 2018 2019 2020

Profit After Tax

65.65

56.92

2.15

2017 2018 2019 2020

-16.25

Claims 891.94

602.67

353.21

244.51
164.72
93.97

2015 2016 2017 2018 2019 2020

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 Premium VS Claims
1,508.44
Premium earned Claims Linear (Premium earned)

1,091.20

679.67 891.94

602.67
484.00
353.21
287.73
244.51
153.73 164.72
93.97

2015 2016 2017 2018 2019 2020

Key Investment Considerations

Key Investment Considerations:

 CHIL has 2,31,973 policies in Health as well as Personal Accident segments as of 30th June 2020.
 Care’s market share grew to 6.20% in the Retail Healthcare Market in FY20.
 Its distribution channel includes digital direct to consumer, banks, NBFCs, individual agents, brokers,
web aggregators, corporate agents, rural banking and others.
 The company is highly customer-centric with a low grievance rate of two complaints per 10,000 policies
and has a claim settlement ratio of 93%. The Combined Ratio* of the company stands at 97%,
establishes the fact that CHIL is profitable.
 The Premium from Direct Business Written grew at 5-year CAGR of 54%, from ₹ 275.80 crores in FY
2014- 15 to ₹ 2,388.98 crores in FY 2019-20.
 The Profit After Tax (PAT) for the Q1 FY2021 is ₹ 20.30 crores which has grown by 132.52% over Q1
FY2020 where it was ₹ 8.73 crores.
 During the pandemic, the company clocked around 30% premium growth and is expected to register
similar or even higher growth in the financial year 2020-21.
 From May 20 to June 20, Care saw a 2x premium growth according to General Insurance Council.
 CHIL has won various awards like – ‘Best Claims Service Provider of the Year’, ‘Bancassurance Leader
of the Year 2018’ by Insurance India Summit & Awards 2018, ‘India’s Most Preferred Travel Insurance’
by IMP Travel Brand Awards 2018, etc.
 Initial Public Offer: Care plans to become India’s first standalone health insurer to go for an IPO as soon
as the pandemic ends. This resolution is approved by its investors and Board of Directors as of 2nd
September 2020.
 Investment: As of February 2020, private equity firm Kedaara Capital has purchased 6.76% stake and
pumped in a total of ₹567 crores, including ₹300 crores of growth capital after which Care's solvency
ratio is more than 2.5 times and is now sufficiently placed to take care of more than 2-3 years of its
growth plans.
 Associations: Multi Commodity Exchange of India (MCX) has tied up with Care Health Insurance to

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 insure its employees under the “Group Cover Covid-19” policy in April 2020. In December 2019, PNB
MetLife India Insurance has tied-up with Care Health Insurance to offer a product that would cover
health, death and illness wherein there will bundling and selling of Care’s health insurance policy with
PNB’s life insurance policy. ICICI Securities partnered in a pure-play fashion in April 2019 with Care to
distribute health insurance products on its digital platform I- Sec along with 200+ retail outlets.

Financial Snapshot
(in ₹ Crores)
Metrics FY2017 FY2018 FY2019 FY 2020 Q1
FY2021
Net Worth 524.75 594.18 700.88 780.98 1,105.46
Gross Premium from 726.07 1,091.61 1,825.57 2,388.98 481.62
Direct Business Written
Net Premium earned 527.20 821.87 1,265.75 1,626.02 372.94
PAT 2.15 -16.25 56.92 65.65 20.29
Basic EPS (in ₹ per share) 0.04 -0.27 0.83 0.93 0.25
No. of shares 52.47 59.48 68.85 72.79 82.58

(in ₹ Crores)
Metrics FY2017 FY2018 FY2019 FY2020 3-year CAGR
Investments 606.81 927.92 1,301.66 1,775.72 43.03%
Fixed Assets 45.68 45.91 56.41 54.52 6.07%
(in ₹ Crores)

FY2021
Metrics FY2020 Q1 FY2021
Extrapolated
Market Capitalization - ₹ 12,552.16 -
Net worth 780.98 1,105.46 1,166.33
Book Value (in ₹ per share) 8.04 11.26 14.12
Price to Book Ratio (P/B) - 8.88 -
Forward Price to Book (P/B) - - 7.08
Gross Written Premium (in ₹ per 32.82 5.83 23.33*
share)
Price to Gross Written Premium - - 4.29*
Ratio
Face Value (in ₹ per share) 10/- 10/- 10/-

 *In Q1 FY2021, the actual Gross Written Premium per share is ₹ 5.83. This has been annualized to ₹ 23.33 owing
to which the Price to Gross Written premium ratio is taken using this annualized Gross Written Premium per
share and price as of 3rd September 2020.
 Note: For Forward Book Value, PAT has been assumed to remain the same as Q1 FY2021 for the remaining 3
quarters of FY2021 by taking the conservative approach. Using this Net worth for FY 2021 has been calculated
to arrive at a Forward Book Value based on the existing number of shares which
is 82.58 crores. Price to Book has been calculated based on price as of 3rd September 2020.

Future Outlook

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 Future Outlook
 Care's operating philosophy is based on the principal tenet of 'consumer centricity and the
company deployed a chatbot, powered by Google Dialogflow, to address customer queries and add
to huge range of products that make them more competitive. Owing to these digital platforms, 85%
of the policies are now issued online by enabling both customers and channel partners by providing
the website, e- portal and application services.
 From May-June 2020 onwards, people started approaching and asking for health insurance which
led to the sector registering a 40% rise YoY owing to soaring significance amid an unprecedented
global health crisis. Industry veterans believe that this trend in the country will continue in the
coming years.
 During the pandemic, the company clocked around 30% premium and expect to register similar or
even higher growth in the financial year 2020-21 and the company is endorsing the need for
comprehensive health insurance policies. This growth will ensure further impetus for the growth
of the health insurance sector as in India retail health insurance penetration is only 3% and out-of-
pocket healthcare spending stands at around 65%.
 IRDAI has allowed life, general and health insurers to offer coronavirus-specific short-term health
insurance policies for periods ranging from 3 to 11 months in both individual and group categories.
The surge in health insurance demand and approval of short-term health insurance policies by
insurance regulator IRDA are big positives for the future prospect of the company

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