LIC reports embedded value of nearly Rs 5.42 lakh crore for March 2022

The Life Insurance Corporation of India reported a slow growth in embedded value for March 2022 compared to the previous six months.

Embedded value is calculated after the insurer's current value of future profits is added to the net asset value. It only measures the future profits based on the existing businesses and does not include the possibilities of policies in the future. So, profits from those are not accounted for.

The insurer on Thursday said its Indian Embedded Value (IEV) was Rs.5,41,492 crore as of March 31, 2022, whereas it was Rs 95,605 crore in the same period last year. However, it was Rs 5,39,686 crore on September 30, 2021. "The IEV as of September 30, 2021, was significantly higher than the one in March 2021 due to the bifurcation of fund that was carried out by LIC pursuant to changes in the LIC Act during the FY 2021-22," the insurer said in a statement.

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"The insurance company would be disclosing the embedded value every six months going forward," said Raj Kumar, the company's managing director. He added that the embedded value would be disclosed with the results from next time.

The company's value of new business (VNB) — which showcases the impact of fresh policies — during the embedded value period was recorded at Rs 7,619 crore as against Rs 4,167 crore during the same period in 2021. "Also, the VNB for the six-month period ended September 30, 2021, was Rs.1,583 crore," the statement said.

The VNB margin for March 31, 2022, was 15.1 percent compared to 9.9 percent for the same period in the year before.

The company's return on embedded value, which values all existing contracts at current day values, for March 31, 2022, was 11.9 percent, whereas it was 36,9 percent in the previous year.