LIC set to announce acquisition in health insurance firm by March 31, as per CEO Mohanty
‘Will not have majority stake’
Life Insurance Corporation of India (LIC) is poised to make a significant entry into the health insurance sector, and discussions to acquire a stake in a health insurance company near completion. LIC’s CEO, Siddhartha Mohanty, has confirmed to CNBC-TV18 that a decision regarding the acquisition is anticipated before 31st March.
A strategic move aimed at expanding LIC’s footprint in the increasingly competitive health insurance market, will leverage the extensive customer base and distribution network of the iconic life insurance brand.
LIC will not seek a majority stake in the health insurer, and this was clarified by Mohanty:
“LIC will not have a 51% stake. We are exploring all possibilities.”
This notable non-majority approach allows LIC to test the waters in a new market segment without overextending its resources.
This decision to explore a new avenue is at a time when the health insurance market is witnessing stiff competition from private insurers eager to capitalise on growing demand.
“We have some expertise in this field, though our products that fixed benefit rather than indemnity such as a mediclaim. We are exploring both organic and inorganic opportunities, including potential acquisitions to establish a presence in the health insurance market,” Mohanty stated last year, highlighting the company’s proactive approach in expanding its service offerings.
Mohanty remains optimistic about finalising the acquisition within the current financial year, stating, “I am very much hopeful that within this financial year, before 31st March, some decision can be taken.”
Additionally, apart from health insurance ambitions, LIC is also in discussions with the Reserve Bank of India (RBI) to issue longer-term bonds. This is an initiative aligned with its strategy as a long-term investor.
The move to explore bonds with maturities of up to 50 or 100 years reflects LIC’s need to manage its asset-liability framework effectively.
“Our people are discussing this from time to time with RBI, and they are also considering this,” Mohanty suggested with regards to ongoing dialogues with the RBI.
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