State owned life insurer LIC is planning to buy one of the five private standalone health insurers in order to enter the country's growing health insurance space, reported Mint. As per the report, LIC is also keen on securing the composite license that grants permission to sell both life and non-life policies.
The Insurance Regulatory and Development Authority of India is planning to introduce this composite license soon. Among the five standalone health insurers, LIC is looking to acquire the one with stronger digital capabilities
“LIC is keener to acquire a standalone health insurance business. There are multiple options being weighed on. One option before LIC is to take over one of the five standalone (health insurance) players, preferably one that has strong digital capabilities," an Executive told Mint
Mint quoted an LIC executive and said that it may take 2 to 3 months for the life insurer to receive the licence from IRDAI.
“For LIC, this makes sense. The work is on internally. The composite licence may take about 2–3 months and then, LIC may consider acquiring an established health insurance company and grow the business from thereon," an executive told Mint.
As per Mint, LIC has also submitted its health insurance plans to Irdai recently, but it does not involve any proposal for a merger with state-run general insurer.
At present all the standalone health insurers in India are privately owned. They include, Niva Bupa Health Insurance Co. Ltd, Aditya Birla Health Insurance Co Ltd, Care Health Insurance Ltd, ManipalCigna Health Insurance Co Ltd, and Star Health & Allied Insurance Co Ltd. When LIC acquires any one of these firms, it would become the country's first state-owned standalone health insurer.
The Mint report further added that the state-run insurer plans to leverage its vast network and agency force of over 1.41 million to sell pure, traditional Mediclaim and health indemnity products after acquiring a readymade health insurance company.
Meanwhile, a buyout will require approvals from the Irdai and the ministry of finance since LIC is owned by the central government. LIC has also not kept any funds aside for the acquistion since the plan is still in the starting stage, reported Mint.
The public sector insurer posted a net profit of Rs 13,781.59 crore for the quarter ending on March 31, 2024- up by 4.5% from Rs 13,190.79 crore reported in the same period of the previous fiscal year.
"The Board of Directors has recommended a final dividend of Rs. 6 per equity share of Rs.10 each for the financial year 2023-24, subject to approval of shareholders in the ensuing Annual General Meeting of the Corporation," it said.
LIC's net income from investments increased by 24.43% year-over-year to Rs 84,425.45 crore in Q4FY24 and net profit for FY24 was Rs 40,676 crore, compared to Rs 36,397 crore in FY23.
Additional pension liability due to wage revision for employees stood at Rs 6,306.29 crore of which Rs 829.19 crore has been recognized in FY24 across respective segments
Also watch: LIC mulling entry into health insurance space, assessing acquisition: Report