LIC's Stake in ManipalCigna: A Game Changer for Health Insurance, Says JP Morgan
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Synopsis
A recent JP Morgan report indicates that LIC's potential acquisition of a significant stake in ManipalCigna Health Insurance could significantly alter the health insurance market landscape.
Key Takeaways
- LIC may acquire a 40-49% stake in ManipalCigna.
- The deal's value is estimated between Rs 3,500-3,700 crore.
- LIC's extensive network of 1.4 million agents will support its new health venture.
- ManipalCigna holds a 1.4% market share in health insurance.
- LIC faces challenges with managing the health loss ratio.
New Delhi, April 1 (NationPress) The potential acquisition of a 40-49 percent stake in ManipalCigna Health Insurance by the Life Insurance Corporation of India (LIC) could significantly transform the health insurance landscape, according to a report from JP Morgan released on Tuesday.
The brokerage asserts that this prospective acquisition represents a strategic initiative for LIC, as it aims to utilize its broad agency distribution network of 1.4 million individual agents to enhance its new health insurance business.
Although ManipalCigna is relatively smaller when compared to LIC, the report suggests that the acquisition is likely to yield considerable value in the coming years.
Reports indicate that LIC is nearing the conclusion of a deal to secure a significant minority stake in ManipalCigna Health Insurance, which operates as a standalone health insurer.
The estimated deal value ranges between Rs 3,500-3,700 crore, resulting in LIC acquiring 40-49 percent ownership of ManipalCigna, which is currently held by Manipal Education and Medical Group (51 percent) and Cigna Holding Overseas (49 percent).
Analysts from JP Morgan predict that LIC’s entry into the health insurance sector could be groundbreaking, featuring competitive initial pricing strategies to capture market share.
However, a significant challenge for LIC will be managing the health loss ratio, a crucial element for the success of this initiative.
ManipalCigna currently holds 1.4 percent of the total health insurance market and 4.7 percent within the standalone health insurance segment, demonstrating encouraging growth.
The brokerage highlights that LIC’s competitive edge in health insurance stems from its economies of scale, primarily due to its well-established agency distribution system.
In spite of ongoing industry discussions, LIC has persistently broadened its coverage. The insurer noted a 28.29 percent increase in group yearly renewable premiums and a 7.9 percent rise in individual premiums for the first 11 months of FY25.
By February 2025, LIC’s total premium collection reached Rs 1.90 lakh crore, reflecting a 1.90 percent increase from the prior year.
In February alone, LIC issued 12.02 lakh policies within the individual segment, while the group yearly renewable category saw 1,430 policies and schemes. Across all categories, LIC’s total policy issuance for the month reached 12.04 lakh.
