LIC shares rise 4% amid reports insurer to buy 50% stake in ManipalCigna Health Insurance

The LIC stock jumped as much as 3.95% on Thursday to hit an intraday high of ₹952.5 apiece on the National Stock Exchange of India (NSE). However, the stock pared some of its early gains to trade at ₹937 apiece, up 2.3%, on the NSE at 12:30 pm. 

According to a media report, LIC is planning to buy a 50% stake in the standalone health insurance company ManipalCigna Health Insurance. The deal could value the health insurer at around ₹4,000 crore, The Economic Times reported. 

ManipalCigna is a joint venture between the Manipal Group and Cigna Corporation. The Bengaluru-based group holds a 51% stake in the company, while Cigna Corporation owns the remaining 49%.

If LIC goes ahead with the acquisition, both companies will reduce their respective stake in ManipalCigna proportionately, the report added.

“Both parties have signed a non-disclosure agreement and are moving forward with discussions for LIC to acquire approximately a 50% stake in the venture,” the report said, quoting a person familiar with the matter.

LIC’s managing director and chief executive, Siddhartha Mohanty, had hinted at this acquisition during an earnings call held earlier this month on November 8 to discuss second-quarter earnings.

“Our groundwork is underway, and within this financial year, we expect to acquire a stake in an existing standalone health insurance provider,” Mohanty had said, without divulging further details.

Analysts say that the deal would allow LIC to tap the increasing demand for health insurance in India. Data shows that the health insurance sector constitutes 37% of the ₹3-lakh-crore general insurance industry in the country.