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regular-article-logo Thursday, 05 December 2024

LIC weighs health foray, mulls stake in ManipalCigna Health Insurance

There is a strong rumour blowing that LIC is in talks to acquire a 50 per cent stake in ManipalCigna Health Insurance, which if finalised could value the latter at ₹4000 crore

Our Bureau Calcutta Published 29.11.24, 10:59 AM
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Life Insurance Corporation of India (LIC) is on a hunt to acquire a strategic stake in a standalone health insurance company - a move that will allow the country's largest life insurance company a foray into health insurance.

There is a strong rumour blowing that LIC is in talks to acquire a 50 per cent stake in ManipalCigna Health Insurance, which if finalised could value the latter at 4000 crore.

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However, LIC tried to douse rumours about an imminent deal.

"We hereby clarify that Life Insurance Corporation of India evaluates and explores various strategic opportunities on an ongoing basis in various sectors including health insurance segment, for growth, diversification of its business and investment opportunities."

"At this stage, there is no material information/event that requires disclosure under Regulation 30 of the Listing Regulations. The Corporation will make appropriate disclosure in compliance with applicable laws, as and when required,” it said in a regulatory filing.

On a day when the Sensex was down by 1.48 per cent, LIC stocks were up 2.54 per cent at Bombay Stock Exchange amid buzz of a deal expectedly taking shape this fiscal.

Data from General Insurance Council shows ManipalCigna Health Insurance recorded a 9.74 per cent year on year growth with a gross written premium of 983.2 crore compared to 859.9 crore in the year ago period.

ManipalCigna's market share was 0.53 per cent among all the non-life insurers and around 4.6 per cent among stand alone health insurers.

Market analysts initially held a view that pending changes to the insurance regulations in the form of a composite license would allow LIC to venture into the health insurance sector. However, acquiring a strategic stake would set the ball rolling even before a composite license gets legislative and regulatory nod.

"It (acquisition) has nothing to do with the composite license. We want to buy some stake in a stand-alone health insurance company. So that can be without the composite license," LIC chairman Siddhartha Mohanty had told analysts at the Q2 earnings call earlier this month.

There are seven standalone health insurance companies operational as of October 2024, including two new entrants - Galaxy Health and Allied Insurance and Narayana Health Insurance.

Between April-October 2024, standalone health insurers together recorded a 24.77 per cent growth in gross direct premium, which is faster than the 9.02 per cent growth of general insurers.

CareEdge Ratings expects the health insurance segment to grow in the range of 18-19 per cent over the next two years, with growth rate for standalone health insurers expected to be in the range of 20-22 per cent.

"We expect the share of the health insurance segment within general insurance to increase in the range of 39 per cent to 40 per cent in FY25," CareEdge Ratings said in a report.

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