State-owned Life Insurance Corporation of India (LIC) is in advanced stages of negotiation to buy a ‘substantial’ stake in a standalone health insurer to broaden its footprint in that segment, the insurer informed the stock exchanges on Tuesday.
Earlier in the day, speaking at the sidelines of an event, LIC Managing Director (MD) and Chief Executive Officer (CEO) Siddhartha Mohanty said the stake-purchase announcement was likely by the end of the current financial year while clarifying it will not be a majority stake.
No binding agreement has been entered into so far, the insurer said.
“The execution and ultimate consummation of the deal is subject to various factors, including approval of the Board of Directors of the Corporation, regulatory approvals and other approvals, if any, before executing any binding agreements. There can be no guarantee or assurance of the execution/ consummation of the potential deal,” the exchange notification said.
Mohanty did not disclose the name of the company in which LIC is looking to acquire a stake but clarified it would not be a majority stake.
“We have plans. Discussion is going on at the final stage. So, that is a natural choice for LIC to be in health insurance…Since regulatory approval takes time, I am very much hopeful that a decision can be taken within this financial (year), before March 31,” Mohanty said on the sidelines of the Global Conference of Actuaries in Mumbai.
“It will not be a majority stake, which means LIC will not have 51 per cent stake,” he said.
Currently, India has seven standalone health insurers — Star Health & Allied Insurance, Niva Bupa Health Insurance, Care Health Insurance, Aditya Birla Health Insurance, ManipalCigna Health Insurance, and Narayana Health Insurance, and Galaxy Health Insurance.
Mohanty also said LIC had requested the Reserve Bank of India (RBI) for additional long-term bonds, including a 100-year bond.
“We are long-term investors. We have contractual obligation to pay back in terms of contract. So, I have to do all these investments, asset liability management properly…Western countries, they have long-term bonds.” Mohanty said.
Earlier, the RBI had introduced 50-year bonds following demand from insurers and pension funds. The first 50-year bond issued in November 2023 saw robust demand from insurers with the RBI receiving 216 bids worth ₹40,200 crore against the notified amount to raise ₹10,000 crore through the 50-year paper.
