Life Insurance Corporation on Thursday said its embedded value stood at Rs 5,41,492 crore as of March 31 compared with Rs 95,605 crore a year ago, and Rs 5,39,686 crore as of September 30, 2021.
The embedded value is worked out as the sum of the adjusted net worth of the insurer and the value of the inforce business.
LIC’s board at its meeting on January 8 approved the bifurcation of the consolidated fund into separate participating and non-participating funds to allow the distribution of the entire surplus generated from the non-participating funds to its shareholders.
This is under the amendment to section 24 of the LIC Act, 1956.
The country’s largest life insurer had engaged Milliman Advisors LLP to determine the embedded value and on Thursday, the board of LIC approved and adopted the valuation.
In its report, Milliman has said that the impact from the bifurcation calculated as of March 31 is less than September 30, 2021, implying an erosion in the market value of the assets of the corporation over a six-month period.
LIC further said that the total value of the new business (VNB) for the year ended March 31, 2022, has been determined at Rs 7,619 crore compared with Rs 4,167 crore for the year ended March 31, 2021.
The VNB margin for the fiscal was 15.1 per cent compared with 9.9 per cent the previous year.
The annualised premium equivalent (APE) for the year ended March 31, 2022, is Rs 50,390 crore.
Individual business accounted for 70.59 per cent of the APE, while the share of group business was 29.41 per cent.
APE is typically calculated as the total value of regular recurring premiums plus 10 per cent of new single premiums written during a particular period.