ManipalCigna Health Insurance Company is a joint venture between Manipal Group and Cigna Corporation. If this deal happens, LIC will buy equal stakes in both the companies.
LIC Health Insurance: The country’s largest life insurance company LIC is planning to enter the health insurance sector. To enter the rapidly growing health insurance sector in the country, the company is trying to buy half of ManipalCigna Health Insurance. The price of this deal can be Rs 4,000 crore. If there is a deal between Cigna Health Insurance and LIC, then this life insurance company will be able to enter the health insurance sector. Let us tell you that ManipalCigna is a joint venture of Manipal Group and Cigna Corporation.
LIC MD had also hinted at acquisition
According to the news published in Economic Times, if this deal happens, both will reduce their stake. LIC MD had also hinted about this acquisition a few days ago. People associated with this matter said that the country’s largest insurance company wants to enter the fast growing health insurance sector at low cost. For this, talks are going on to acquire half the stake in ManipalCigna Health Insurance.
Health insurance has a 37 percent stake
ManipalCigna is a joint stake of Manipal Education & Medical Group and US-based Cigna Corporation. Bengaluru-based Manipal Education Group has a 51% stake in the health insurance company, while Cigna Corporation has the remaining 49% stake. If this deal is finalized, it will give the government insurance company LIC an opportunity to do business different from its life insurance portfolio. Let us tell you that health insurance has a 37 percent stake in the country’s insurance sector.
Both companies signed a non-disclosure agreement
A person associated with this matter said that both parties have signed a non-disclosure agreement. LIC is in talks to acquire 50% stake in this venture. According to initial talks, Manipal Group and Cigna Corporation will reduce their stake in the insurance company proportionately. Another person said that the health insurance company can get around Rs 4,000 crore from this deal.
No official information was given
However, no information has been given by ManipalCigna and LIC spokesperson in this regard. Let us tell you that on November 8, LIC MD and CEO Siddhartha Mohanty had said that LIC is planning to enter the health insurance market. He had said at that time that we are preparing for this. However, he did not give much information about it at that time.
Valuation can be determined by this method
Public information about the valuation of non-listed company ManipalCigna is not available. But the valuation of listed standalone health insurance companies is two to three times their gross written premium (GWP). Niva Bupa Health Insurance, which has a market cap of around 13,740 crore based on share price at the close of trading on Wednesday, had reported a GWP of 5,600 crore for FY24. Similarly, Star Health and Allied Insurance, which reported a GWP of Rs 15,251 crore, has a market cap of Rs 26,843 crore.
Based on this matrix, ManipalCigna had reported a GWP of ₹1,691 crore in the previous financial year. On this basis, the valuation of the company could be around Rs 3,500-4,000 crore. If LIC chooses to acquire a 50% stake in the company, it may have to pay around Rs 1,750-2,000 crore at this valuation.
