'Will not have majority stake': LIC to announce acquisition in health insurance firm by March 31, says CEO Mohanty

Life Insurance Corporation of India (LIC) is poised to make a significant entry into the health insurance sector, as discussions to acquire a stake in a health insurance company near completion. LIC's CEO, Siddhartha Mohanty, confirmed to CNBC-TV18 that a decision regarding the acquisition is anticipated before March 31. 

This strategic move is aimed at broadening LIC’s footprint in the increasingly competitive health insurance market, leveraging its extensive customer base and distribution network. 

LIC, traditionally focused on life insurance, pension plans, and investment-linked insurance products, is seeking to diversify its portfolio by entering the health insurance sector for the first time. 

Notably, LIC will not seek a majority stake in the health insurer, as clarified by Mohanty: "LIC will not have a 51% stake. We are exploring all possibilities." This non-majority approach allows LIC to test the waters in a new market segment without overextending its resources. 

The decision comes at a time when the health insurance market is witnessing stiff competition from private insurers eager to capitalise on growing demand. "We have some expertise in this field, though our products are fixed benefit rather than indemnity like mediclaim. We are exploring both organic and inorganic opportunities, including potential acquisitions to establish a presence in the health insurance market," Mohanty had stated last year, highlighting the company's proactive approach to expanding its service offerings.

Mohanty remains optimistic about finalising the acquisition within the current financial year, stating, "I am very much hopeful that within this financial year, before March 31, some decision can be taken." 

In addition to its health insurance ambitions, LIC is also in discussions with the Reserve Bank of India (RBI) to issue longer-term bonds, an initiative aligned with its strategy as a long-term investor. The move to explore bonds with maturities of up to 50 or 100 years reflects LIC's need to manage its asset-liability framework effectively. "Our people are discussing this from time to time with RBI, and they are also considering this," Mohanty noted, suggesting ongoing dialogues with the RBI. 

Shares of LIC reflected positive investor sentiment, trading 0.83% higher at ₹751.20 on the BSE amid these developments. 

The potential entry into the health insurance market and the issuance of long-term bonds are expected to bolster LIC's market position and financial resilience.