LIC to acquire ‘substantial’ stake in pure health insurer, announcement likely by March 31

Mumbai:Public sector behemoth Life Insurance Corporation of India (LIC) is in the final stage of discussions to acquire a substantial stake in a

pure health insurance company and would be announcing the decision before March 31.

Speaking to reporters on the sidelines of the Global Conference of Actuaries, Siddhartha Mohanty, managing director and chief executive officer at LIC said, “Discussions are in the final stage (to acquire stake in a health insurer). It is a natural choice for LIC to be in health insurance…Regulatory approvals take time, I am hopeful that a decision will be taken within this financial year, before March 31.”

While Mohanty said that the insurer is not keen to have a 51 per cent stake, in a notice to the exchanges late evening, LIC said that the stake would be substantial and would broaden the Corporation’s footprint in the health insurance market. The notice said that talks are still in advanced stage and no binding agreement has been entered into and that there can be “no guarantee or assurance of the execution/ consummation of the potential deal.”

While there were reports that LIC is in talks with Manipal Cigna Health Insurance, Mohanty refused to divulge the name of the health insurer. Currently, there are seven standalone health insurance companies-Star Health & Allied Insurance, Niva Bupa Health Insurance,Care Health Insurance, Aditya Birla Health Insurance, ManipalCigna Health Insurance, Narayana Health Insurance, and Galaxy Health Insurance.

Separately, on a question on long term government bonds, Mohanty said that LIC has requested the Reserve Bank of India (RBI) to issue additional long-term bonds for 50 year and 100 year bonds.

“We sell whole life plans which have a maturity of 100 years…We are long-term investors. We have contractual obligations to pay back as per the contract. So, I have to manage investments and asset-liability properly.”

While the RBI currently permits bonds with maturities of 20 to 40 years, globally 100-year bonds are not uncommon. "Many countries issue 100-year bonds in the global market, but India has yet to introduce such bonds due to limited demand and low activity in the secondary market,” Mohanty said.