Shares of Life Insurance Corporation of India (LIC) increased by 1% to ₹927 apiece on 28 November 2024. This followed reports suggesting that LIC is exploring the acquisition of a 50% stake in ManipalCigna Health Insurance. This move signals LIC's intent to expand its presence in the health insurance sector, a growing focus in India's insurance market.
Details about ManipalCigna Health Insurance
ManipalCigna Health Insurance is a joint venture between the Manipal Education & Medical Group, based in Bengaluru, and US-based Cigna Corporation. The Indian partner holds a 51% stake, while Cigna owns 49%. The company is not publicly listed, making LIC's potential investment a strategic partnership rather than a market acquisition.
LIC's strategy to expand
LIC has been vocal about its plans to enter the health insurance segment. During an analyst call for Q2 of FY25, LIC's management indicated that groundwork was underway to identify a suitable health insurance company, with a decision expected within the fiscal year. This reported acquisition aligns with LIC's long-term strategy of diversification and growth, adding depth to its portfolio and enhancing its presence in the Indian health insurance market.
LIC's financial performance in Q2FY25
LIC reported mixed financial results for the quarter ending September 2024. The insurer's net profit declined by nearly 4% year-on-year, amounting to ₹7,621 crore. However, its net income saw a 12% increase, reaching ₹1.2 lakh crore.
The company's operational metrics showed growth, with its Annualised Premium Equivalent (APE) rising 26% year-on-year to ₹16,465 crore. Additionally, the Value of New Business (VNB) surged by 47% year-on-year to ₹2,941 crore, resulting in an improvement in VNB margins by 257 basis points, reaching 18%. These metrics reflect strong operational profitability despite a decline in net profits.
LIC's share market investment performance year-to-date
LIC's share market investment performance has been exceptional year-to-date, with its shares gaining over 10%. However, the stock has faced challenges in the past three months, declining by more than 15%. Despite this, LIC's shares remain a focal point for investors seeking opportunities in the insurance and financial sectors.
Current market sentiment
Reports of LIC's discussions regarding the acquisition of a significant stake in ManipalCigna Health Insurance appear to have boosted investor confidence. This move is seen as part of LIC's broader strategy to establish a foothold in the growing health insurance sector.
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