LIC delays health insurance push as focus shifts to government’s OFS

LIC’s plan to acquire a strategic stake in a health insurance company has been put on hold for now, with the insurer turning its attention to the government’s upcoming offer for sale, the process for which is expected to start as early as January.

There had been fair amount of excitement when LIC first began exploring a move into health insurance, and due diligence on a potential acquisition had already begun. The possibility of LIC entering the sector had created apprehension among existing health insurers, given the company’s large size and long-standing customer base.

However, sources indicate that the immediate priority for both LIC and the government is the OFS, which will begin the process of reducing the government’s holding in the insurer. The government currently owns 96.5% of LIC and needs to bring this down to about 90% by May 2027 to meet regulatory requirements. The upcoming OFS is expected to be the first step in this multi-year effort.

With the focus now squarely on the stake sale, LIC’s proposed move into the health insurance sector appears to have been pushed to a later date. While the intention to diversify remains, the expansion plan has been shelved for the moment as the company prepares for the government’s divestment roadmap.