According to sources in the insurance industry, LIC’s choice of Manipal Cigna is purely on the basis of cheaper valuation among the old stand alone health insurance companies
New Delhi: Life insurance behemoth Life Insurance Corporation (LIC) is considering picking up stakes in health insurance joint venture(JV) Manipal Cigna Health Insurance, a joint venture between US based Cigna Corporation and Bengaluru based Manipal Education and Medical Group.
Manipal Group holds 51 per cent stake in this 10 year old JV while the rest is with Cigna, one of the large health insurance multinationals.
Earlier, state owned LIC had said they would prefer acquiring a significant stake in one of the seven Indian health insurance companies and will not be interested in starting a new health insurance company.
According to sources in the industry, LIC’s choice of Manipal Cigna is purely on the basis of cheaper valuation among the old stand alone health insurance companies.
Among eight stand alone health insurers, Narayan Health and Galaxy are completely new and among the six old health insurers ManipalCigna’s valuation is relatively cheaper, said sources.
However, it has not been possible to get any responses from LIC and Manipal Cigna Health Insurance on the negotiation between two companies.
Life Insurance Corporation MD and CEO Siddhartha Mohanty earlier said the state-owned company will take a call on buying a stake in a standalone health insurer in the current financial year.
“The ground work is going on…search for suitable health insurance company is going on…we will finalise stake within this financial year,” he had said during post result media conference.
Asked about the quantum of stake LIC will have in health insurance company, he said it would depend on various factors, including valuation.
“We are now actively searching for an Indian health insurer where we can pick up a large stake but will not run the company on day- to- day basis but will have a say in the management,’’ Mohanty had said.
Once all the groundworks are done, he said, LIC would approach the board for its approval to foray into the health insurance segment.
`Any stake beyond 50 per cent in any company by the LIC will bring it under government regulations, said sources .
Mohanty had further clarified that LIC’s foray into health insurance has nothing to do with the proposed moves by the Indian government and insurance regulator IRDAI to allow composite license in the Indian insurance industry.
“We are not interested in floating a new health insurance company for which we have to apply for a separate license. LIC doesn’t need a composite license. Even if it is introduced, they will not opt for it,’’ Mohanty had said.
“The health insurance sector has a lot of potential. Longevity is increasing, but diseases are also on the rise. Additionally, medical expenses are very high, so health insurance has significant potential. Less than 3 per cent of total healthcare expenses are currently covered by insurance,” Mohanty had said.