LIC shares gain as reports hint firm eyeing 50% stake in ManipalCigna Health Insurance

Year-to-date, LIC shares have gained over 10 percent

Shares of Life Insurance Corporation of India (LIC) gained by a percent to Rs 927 apiece on November 28 following reports indicating that the insurer is exploring a significant foray into the health insurance segment. LIC is reportedly in advanced discussions to acquire a substantial stake in ManipalCigna Health Insurance, with sources suggesting it may aim for a 50 percent stake in the company.

ManipalCigna Health Insurance is a joint venture between Bengaluru-based Manipal Education & Medical Group, which holds a 51 percent stake, and US-based Cigna Corporation, which owns the remaining 49 percent. The company is not publicly listed, making this a strategic partnership rather than a market acquisition.

This move aligns with LIC's earlier hints about expanding its footprint in the health insurance sector. During its Q2 analyst call, LIC MD and CEO Siddhartha Mohanty mentioned, “The groundwork is on for finding a suitable health insurance company, and we will finalize a stake within this fiscal year.” The acquisition could potentially strengthen LIC’s portfolio by diversifying its offerings and tapping into India’s fast-growing health insurance market.

ALSO READ: LIC targets 50% in ManipalCigna to enter health insurance space: Report

The development follows LIC's mixed financial performance in the recently concluded September quarter. The insurer's net profit dipped nearly 4 percent year-on-year to Rs 7,621 crore, despite a 12 percent rise in net income to Rs 1.2 lakh crore. On the operational front, LIC's Annualised Premium Equivalent (APE) grew 26 percent year-on-year to Rs 16,465 crore, while the Value of New Business (VNB) surged 47 percent year-on-year to Rs 2,941 crore. Consequently, VNB margins improved by 257 basis points, reaching 18 percent during the quarter, signaling healthy profitability in its core insurance business.

Out of the 18 analysts tracking the stock, 13 have assigned a "buy" rating, 4 recommend a "hold," and only 1 has issued a "sell" call. Year-to-date, LIC shares have gained over 10 percent, but the stock has faced pressure in the past three months, declining more than 15 percent.

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