After the insurer reports embedded value at Rs. 5.41 lakh crore at the end of FY22, LIC shares decli



Following the insurer's announcement that its Indian embedded value (IEV) for March has been estimated at Rs 5.41 lakh crore, Life Insurance Corporation of India's (LIC) share price declined on Friday. As of March 31, 2022, LIC announced that the Indian Embedded Value (IEV) was Rs 5,41,492 crore (Rs 5.41 trillion), up from Rs 5.39 trillion in September 2021 and Rs 95,605 crore in March 2021.

The value of bonds, government securities, and other fixed income instruments has been impacted by the growing interest rate. The most recent Indian embedded value of LIC has taken these into account. From September till the end of March 2022, mark-to-market losses have been in the neighborhood of Rs 40,000 crore. According to Raj Kumar, managing director of LIC, "the policy sales industry has risen, and that's how the net growth in EV is Rs 2,000 crore.


The consolidated value of shareholders' interests in the life insurance industry is measured by the Embedded Value (EV). After making a reasonable provision for the total business risks, it shows the present value of shareholders' interests in the earnings distributable from the assets allotted to the company.

"The exercise to determine Indian Embedded Value (IEV) has been finished. On July 14, 2022, the board approved the Milliman Advisors LLP IEV report, Kumar continued.

He stated that going in the future, the IEV will be revealed six times a year, or at the end of March and September. The corporation's embedded value was Rs 5,39,686 crore as of September 30, 2021.


The state-run insurer stated in a release that the bifurcation of funds that was implemented by LIC as a result of modifications made to the LIC Act during the FY 2021–22 was the reason why the IEV as of September 30, 2021, was much greater than the IEV of March 2021.


"The change in EV must be considered in its entirety. A downward market movement occurred, and the estimate has accounted for its influence of almost Rs 40,000 crore. The Value of New Business (VNB) increased, nonetheless, and as a result, there was a net growth of almost Rs 2,000 crore (in March 2022) compared to September 2022, according to its Executive Director (Actuarial), K R Ashok.

From its IPO price of Rs 949 a share, the price of LIC shares has decreased by about 25%. However, Motilal Oswal experts predict that the stock could rise by 17% in the future. According to the brokerage's most recent note, LIC has all it needs to keep holding down the industry's top spot and accelerate development in highly profitable product categories (primarily protection and non-PAR savings/annuities). However, shifting gears for such a sizable firm calls for exceptional and well-thought-out execution that must also withstand regular management rotation. According to the statement, "We predict LIC to deliver 10% CAGR in NBP during FY22-24, while better margin trajectory and stability in the capital market would enable improved EV growth moving forward."

According to LIC, the ROEV (Return on Embedded Value) for March 2022 was 11.9%, down from March 2021's ROEV of 36.9%. It also stated that the calculations have taken into account the bifurcation impact of the single life fund's split into par and non-par funds during FY 2021–2022. According to the statement, LIC's annualized premium equivalent (APE) for FY22 was calculated to be Rs 50,390 crore. This is more than the APE FY21, which was Rs 45,588 crore, according to the filing.


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