LIC set to buy 40-49% stake in Manipal Cigna Health Insurance: Report

The pact will make it a three-way tie-up with Pai’s Manipal Education & Medical Group and US-based Cigna Corporation

Life Insurance Corporation (LIC) is fine-tuning an agreement with Ranjan Pai-led Manipal Cigna Health Insurance for a significant minority stake, a report by The Economic Times said on March 27.

LIC, which has a market capitalization of Rs 4.97 lakh crore, will buy a 40-49 percent stake in the company for a valuation of Rs 3,500- 3,750 crore, ET said. The pact will make it a three-way tie-up with Pai’s Manipal Education & Medical Group and US-based Cigna Corporation, the newspaper claimed.

Moneycontrol couldn’t independently verify the report.

The development marks the entry of state-run insurance behemoth’s foray into a rapidly growing domestic health insurance market, the report said, adding that it will allow the firm to enter a sector that makes up for 37 percent of the country’s general insurance market worth Rs 3 lakh crore.

The deal also has the potential to disrupt the market due to LIC’s strong distribution network and balance sheet heft, ET said.

Last week, CEO Siddhartha Mohanty had said the company hopes to decide on acquiring stake by the end of March.

"I am very much hopeful that within this financial year, before 31st March, some decision can be taken,” Mohanty, had said.

Competition in India’s insurance business has risen in recent years as private insurers have ramped up their presence in the health insurance market to tap into growing consumer demand.

LIC sells life insurance policies as well as pension plans, investment-linked insurance, but no health insurance.

If it enters the health space through a stake purchase, LIC will compete with the likes of Star Health Insurance, Aditya Birla Health Insurance, Niva Bupa Health Insurance and Care Health Insurance.

With Reuters inputs