 "LIC in talks to acquire 50% stake in ManipalCigna Health Insurance")
Life Insurance Corporation of India (LIC), the country’s largest insurer, is in advanced discussions to acquire up to 50 per cent of the stake in ManipalCigna Health Insurance, marking its strategic entry into the health insurance sector, reported The Economic Times citing sources. This move is seen as a significant step for LIC as it seeks to expand its footprint into the market for medical expense coverage, which is currently underserved.
ManipalCigna Health Insurance is a joint venture between the Manipal Education & Medical Group and the US-based Cigna Corporation. The Bengaluru-based Manipal Group currently holds a 51 per cent majority stake in the health insurer, with the remaining 49 per cent owned by Cigna.
The discussions, still in their preliminary stages, are aimed at allowing LIC to diversify its portfolio beyond life insurance and tap into the growing demand for health insurance, which accounts for 37 per cent of the Rs 3 trillion general insurance industry. “Both parties have signed a non-disclosure agreement and are progressing with talks for LIC to acquire approximately a 50 per cent stake in the venture,” a source said to The Economic Times.
According to initial discussions, both the Manipal Group and Cigna will proportionally reduce their stakes in the company. The deal, if finalised, could value ManipalCigna Health Insurance at approximately Rs 4,000 crore, the source noted.
During the company’s earnings call on November 8, Siddhartha Mohanty, managing director and chief executive of LIC, confirmed the insurer’s plans to acquire a stake in an existing standalone health insurer within the current financial year. “Our groundwork is underway, and within this financial year, we expect to acquire a stake in an existing standalone health insurance provider,” he said, without offering further details.
While ManipalCigna is unlisted, the valuations of listed standalone health insurers provide a benchmark for the company’s worth. Niva Bupa Health Insurance, with a market cap of Rs 13,740 crore as of Wednesday’s closing stock price, reported Rs 5,600 crore in gross written premium (GWP) for fiscal year 2024. Similarly, Star Health & Allied Insurance, with a market value of Rs 26,843 crore, posted GWP of Rs 15,251 crore.
Based on industry metrics, ManipalCigna, which reported Rs 1,691 crore in GWP last fiscal year, is estimated to be valued between Rs 3,500 crore and Rs 4,000 crore. At this valuation, LIC’s acquisition of a 50 per cent stake could cost the insurer between Rs 1,750 crore and Rs 2,000 crore.