The Life Insurance Corporation of India (LIC) is in the final stages of discussions to acquire a substantial stake in a pure health insurance company. According to Siddhartha Mohanty, Managing Director and CEO of LIC, the company is likely to announce the decision before March 31. This move is seen as a natural choice for LIC to expand its presence in the health insurance market. While Mohanty declined to reveal the name of the health insurer, reports suggest that LIC is in talks with Manipal Cigna Health Insurance.
LIC has clarified that it is not seeking a 51% stake in the health insurer, but rather a substantial stake that would broaden its footprint in the health insurance market. The company has emphasized that regulatory approvals are still pending and there is no guarantee that the deal will be consummated. Currently, there are seven standalone health insurance companies in India, including Star Health & Allied Insurance, Niva Bupa Health Insurance, and Care Health Insurance.
In a separate development, Mohanty revealed that LIC has requested the Reserve Bank of India (RBI) to issue additional long-term bonds with maturities of 50 years and 100 years. This move is aimed at enabling LIC to better manage its investments and asset-liability mismatch, given its long-term contractual obligations to policyholders. While the RBI currently permits bonds with maturities of 20 to 40 years, 100-year bonds are not uncommon in global markets.
The potential acquisition of a health insurance company and the request for longer-term bonds are seen as strategic moves by LIC to expand its presence in the insurance market and manage its investments more effectively. As a public sector behemoth, LIC’s decisions are closely watched by the industry and investors. The company’s plans to enter the health insurance market and its request for longer-term bonds are likely to have significant implications for the insurance industry and the broader financial markets.