LIC's embedded value is estimated to be Rs5.42 lakh crore

15 Jul 2022 , 11:20 AM

The value of the new business (VNB) for FY22 increased by about 83%, according to the Life Insurance Corporation of India (LIC), which also revealed that its Indian embedded value has been estimated at Rs5.42 lakh crore.

The VNB was Rs7,619 crores, up from Rs4,167 crores in the previous fiscal. When compared to the previous fiscal year, the VNB margin increased to 15.1% in FY22 from 9.9%.

The insurer that went public this year reported that, as of the end of March, its Indian embedded value was Rs5.42 lakh crore, about six times higher than it was a year prior. In comparison to the same period last year, the return on embedded value was 11.9%, down from 36.9%. The value was revealed after it was supposed to be announced with quarterly results moving forward.

The largest insurer in India claimed that as a result of its division of a single fund into distinct par and non-par funds in response to amendments made to the LIC Act during FY22, the embedded value was much greater.

As of March 31, 2021, and as of September 30, 2021, the embedded value, a metric used to assess the consolidated value of shareholders' interests in the life insurance business, was Rs95,605 crore and Rs5.40 lakh crore, respectively.

According to Milliman Advisors LLP, the company LIC hired for this job, this is the case. The valuation report was approved by the LIC board on Thursday.

According to LIC authorities, a 10% decline in the share price causes a 6.5% decline in embedded value. On the BSE, the shares decreased by 0.95% on Thursday to settle at Rs712.15. The initial public offering price of Rs949 per share for LIC shares was discounted by 8.62% when they were listed on the BSE for Rs865.

In contrast to the previous year, LIC's annualized premium equivalent (APE) for FY22 was Rs50,390 crore. APE of Rs42,170 crore was taken into consideration when arriving at VNB for FY22.

Individual business and group business had respective APEs of Rs35,572 crore and Rs14,818 crore. APE was accounted for by one entity at 70.59%. The par business share within the individual business was 92.88% on an APE basis, with the remaining 7.12% coming from the non-par business, according to the insurer. For the quarter ending in March, LIC's net profit decreased by 17.4% to Rs2,409 crore.