Manipal group buys out TTK stakes in CignaTTK Health Insurance

On Friday, the Manipal Group bought out TTK's stakes in CignaTTK Health Insurance. On the occasion Business Today's Mahesh Nayak spoke to Sandeep Patel, CEO & MD of CignaTTK Health Insurance on what it means on change in partner, rising stake in the JV and the future plan for the health insurance company. "The partnership with Manipal group means from a product partner we will be providing healthcare and complete well-being solutions to our customers," says Patel.

Enjoying the valuation of Rs 500 crore, following the rising stake in the company from 26 per cent to 49 per cent, Patel expect the revenues of the Indian entity to grow by at least 50 per cent this financial year. Last year, the Indian entity which recorded a revenue of Rs 221 crore ($95-100 million), - compared to $2.5 billion combined revenues of entities in South Korea and China - plans to break even its India operation by 2020.

Edited Excerpt:

BT: Today you have announced of getting a new partner Manipal Group. Why this change?

Patel: TTK wanted to focus on its core business - fast moving consumer business, while Manipal group were scouting an entry into the healthcare insurance space. It has worked for both and the move has been positive for us, as the partnership with Manipal group means from a product partner we will be providing healthcare and complete well-being solutions to our customers, following Manipal Group's presence in hospital.

Cigna TTK has filed an application with India's insurance regulator, the IRDAI, for a change in partnership from the TTK Group to the Manipal Group. This is subject to regulatory approval. This proposed partner change, together with the recent filing for an increased investment from Cigna Corporation, is a significant step for us and marks Cigna's long-term commitment to the Indian health insurance sector. The Manipal Group is a leader in the field of healthcare delivery and higher education, and is one of the most established companies in this sector in India. The partnership will help us to provide our customers with a more comprehensive suite of healthcare solutions and enable us to further integrate within the healthcare delivery ecosystem.

BT: Why Cigna increased its stake in the JV?

Patel: This increase of Cigna's stake in Cigna TTK is a significant step for us. This strengthens our commitment to the Indian health insurance market. We look forward to our journey in India by working on our mission of improving the health, well-being and sense of security of the people we serve.

The increase in stake will help us deepen our focus on:

Expanding our distribution network: We will continue to seek new partnerships through bancassurance tie ups, agents and brokers & look at penetrating deeper in rural markets including micro markets.

Enhancing our digital capabilities: We have been going digital with 50 per cent of our policies are now paperless and we plan to increase this to 80 per cent.

Innovation in our products and services: We want to focus on products and services that can truly meet the needs of our customers. Innovation to us comes from being closer to the needs of the customers and bridging the gaps in the realm of healthcare. We have recently launched the first of its kind product called ProHealth Select with unique features i.e. 'reassurance benefit' and 'inflation shield'

BT: Why is TTK willing to dilute its stake? How much money are you infusing in the JV and what valuation does the company enjoys and how was it when you had initially formed the JV?

Patel: The hike in Cigna's stake in the joint venture is essentially transfer of funds from one shareholder to the other. The amount infused is Rs 114 crore.  As per the agreement, the capital will be invested in the company.  Cigna's stake is now at 49 per cent in the JV.

BT: How different are you compared to your peers? In terms of products and policy and claim policy?

Patel: We have done extensive research to understand the market needs and our products and services are very much in line with this, but we will also leverage our global experience to develop products that we are confident will be suitable for India. The value of Cigna's services will be beneficial to customers at their various life stages, as Cigna has extensive breadth and depth of resources and expertise to bring to India.  Our strong model of product innovation and channel distribution will well serve the needs of the Indian market.  

We have created a niche in the health and wellness space, we truly believe in partnering our customers in illness and in wellness. Our ProActiv living program helps our customers to live a healthy and holistic life. Here we offer a slew of exclusive programs such as weight management diabetes, hypertensive and much more. Moreover, our claim settlement ratio is amongst the highest in the health insurance space.

BT: When do you plan to break even? Are you on track?

Patel: Yes we are on track and we plan to break even in our 6th year (by 2020).

BT: What is the company's vision for 2020?

Patel: With the rapid growth of the middle class and rise in lifestyle diseases, healthcare is one of India's fastest-growing sectors.  Our increased investment and proposed new partner will enable us to go deeper in India by growing our distribution network; go local by enriching customer experience through product and service enhancements; and go beyond by enhancing our digital capabilities to meet the needs of people in India.

The plan going forward is to increase our presence in other markets in the country. We are currently present in 40 locations and we plan to move up to 65 locations. Our agency network to increase from 19000 to 25000 agents. We look forward to strengthening our digital capabilities and enhancing our technological infrastructure to be bring efficiency and effectiveness in our business. We want to deepen focus in online sales , right now 10 per cent of our new business premium comes from online sales and we plan to increase this to 25 per cent, strengthen our bancassurance partnerships and build a larger network through banca alliances & focus on meeting the needs of the diverse set of customers that our banks have through our products and services. We plan to increase our employee strength from 900 to 1200.