Shares of Life Insurance Corporation of India (LIC) were shooting up on Friday as the government-owned insurer reportedly said it was looking to enter the health insurance sector through acquisitions.

What Happened: LIC is set to make a move into the health insurance sector by acquiring one of India’s five private standalone health insurance companies, preferably one with a strong digital presence, Mint reported, citing two LIC executives.

With assets exceeding ₹51 trillion and a dominant 61.5% market share in life insurance, LIC aims to secure a composite license. This license, expected to be introduced by the Insurance Regulatory and Development Authority of India (IRDAI), will enable insurers to offer both life and non-life policies.

On executive told the business publication that it would make strategic sense for LIC and that the firm expects the composite license in two to three months, after which LIC could acquire an established health insurance company.

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LIC has reportedly submitted its health insurance plans to IRDAI, with no plans for a merger with a state-run general insurer.

India’s standalone health insurers include Niva Bupa Health Insurance, Aditya Birla Health Insurance, Care Health Insurance, ManipalCigna Health Insurance and Star Health & Allied Insurance. LIC’s acquisition of any of these would make it the first state-owned standalone health insurer.

LIC reportedly plans to leverage its vast network and agency force to sell traditional Mediclaim and health indemnity products after acquiring a health insurance company. Any buyout will require approvals from IRDAI and the finance ministry.

However, the publication said LIC has not earmarked specific funds for the acquisition as plans are still nascent. The IRDAI’s FY23 annual report states that insurers covered 55 crore people under 2.26 crore health insurance policies.

Currently, LIC offers two limited, fixed-benefit health covers providing hospital cash. These health products generated ₹300 crore out of LIC's total premium income of ₹4.75 trillion in FY24, contributing 0.07% to its overall non-par new business premium.

Price Action: LIC’s share price was up 5.76% at ₹1,060.05 around noon on Friday. The stock has risen more than 23% so far this year.

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