India’s largest insurer, Life Insurance Corporation of India (LIC), is in advanced discussions to acquire a 50% stake in ManipalCigna Health Insurance. This strategic move marks LIC’s entry into the health insurance segment, aiming to diversify its portfolio and capitalize on the growing demand for health coverage in the country.
Expanding into the health insurance market
ManipalCigna Health Insurance is a joint venture between Manipal Education & Medical Group, holding a 51% majority stake, and the US-based Cigna Corporation, which owns the remaining 49%. The potential deal, currently in preliminary stages, is expected to significantly enhance LIC’s footprint in the health insurance sector, which constitutes 37% of India’s ₹3 trillion general insurance industry.
As per reports,the two parties have signed a non-disclosure agreement, paving the way for negotiations. A source close to the matter revealed,“Both parties have signed a non-disclosure agreement and are progressing with talks for LIC to acquire approximately a 50% stake in the venture.”
Strategic portfolio diversification
The proposed acquisition aligns with LIC’s strategy to diversify beyond life insurance and address the underserved medical expense coverage market. During an earnings call on November 8, Siddhartha Mohanty, Managing Director and CEO of LIC, stated,“Our groundwork is underway, and within this financial year, we expect to acquire a stake in an existing standalone health insurance provider.”
This move is seen as a part of LIC’s broader plans to tap into the growing health insurance demand driven by rising healthcare costs and increased awareness.
Valuation and stake reduction
ManipalCigna Health Insurance, which reported a gross written premium (GWP) of ₹1,691 crore in FY24, is estimated to be valued between ₹3,500 crore and ₹4,000 crore. If the deal materializes, LIC’s acquisition of a 50% stake could cost between ₹1,750 crore and ₹2,000 crore. Both Manipal and Cigna are expected to proportionally reduce their stakes as part of the agreement.
Benchmarking industry leaders
The valuation of ManipalCigna is being compared with listed health insurers like Niva Bupa Health Insurance, valued at ₹13,740 crore with ₹5,600 crore GWP in FY24, and Star Health & Allied Insurance, valued at ₹26,843 crore with ₹15,251 crore GWP.
