The Indian Embedded Value (IEV) of Life Insurance Corporation of India (LIC) as on March 31, 2022, has been determined at ₹5,41,492 crore compared with ₹95,605 crore as on March 31, 2021 and ₹5,39,686 crore as on September 30, 2021, the insurer said in a filing with the stock exchanges.
“The IEV as of September 30, 2021 was significantly higher than the IEV of 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,” it said.
LIC’s board on Thursday approved the report on Indian Embedded Value (IEV) as on March 31, 2022. It had engaged Milliman Advisors LLP for determining the IEV of the LIC of India as on March 31 this year.
There had been a delay in the release of the report and given the market volatility, there was a mark-to-market impact of ₹40,000 crore, top LIC officials said at a virtual press conference.
THe IEV would now be disclosed every six months, they said, adding that the Embedded Value is the value of the whole corporation and represents the business for shareholders in its entirety.
As mandated under the amended section 24 of the LIC Act, 1956, the board of LIC in its meeting held on January 8, 2022 had approved bifurcation of the single fund into separate Par and Non-Par funds and the effect of such bifurcation had reflected in the financials as on March 31, 2022.
Top executives at the insurer said that the Value of New Business (VNB) for the year ended March 31, 2022 had been determined at ₹7,619 crore compared with ₹4,167 crore in the previous year.
Also, the VNB for the six months ended September 30, 2021 was ₹1,583 crore.
“The VNB margin, for the year ended March 31, 2022 is 15.1% as compared to VNB margin of 9.9% for the year ended March 31, 2021,” it said in the filing.
The Annualised Premium Equivalent (APE) for the year ended March 31, 2022 was ₹50,390 crore. The APE for the previous year was ₹45,588 crore and the APE considered for arriving at VNB for that year was ₹42,170 crore, LIC said.
Further, for FY22, the APE of the Individual business and the Group business was ₹35,572 crore and ₹14,818 crore, respectively.
The Return on embedded value (ROEV) for FY22 was 11.9% compared with 36.9% for the previous year. “It is clarified that these calculations take into account the bifurcation impact of the split of single life fund into par and non-par fund during the FY 2021-22,” LIC said.
