LIC Embedded Value: LIC can disclose by July 15, know how much is the company’s capital

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Author: Siddharth PriyadarshiPublish Date: Thu, 30 Jun 2022 12:34 PM (IST)Updated Date: Thu, 30 Jun 2022 12:34 PM (IST)

New Delhi, Business Desk. Life Insurance Corporation on Wednesday said it is assessing its embedded value as of March 2022 and it is expected to be completed by July 15. LIC has said in a statement that once the embedded value is determined, it will be made public after necessary approvals.

What is Embedded Value

Embedded value is a measure of the value of an insurance company. It is also a tool to know the share value of the shareholders in the life insurance business. It represents the interests of the shareholders in the income from the assets allocated, in addition to the funds reserved for the total risk in the insurance business. Let us inform that the embedded value of LIC was estimated to be around ₹ 5.4 lakh crore on September 30, 2021 by international firm Milliman Advisors. Embedded value is essential to a company’s valuation.

When will LIC’s ‘acche din’ come?

Last month, through LIC’s biggest IPO, the government raised around Rs 20,500 crore by working its 3.5 per cent stake in the insurance company. Post-listing, on a standalone basis, LIC’s net profit declined by 18 per cent to Rs 2,371.55 crore for the quarter ended March 2022, as against Rs 2,893.48 crore in the year-ago period.

On a broader scale, profit after tax declined by 17 per cent to Rs 2,409 crore in the fourth quarter ended March 2022 from Rs 2,917 crore in the same quarter a year ago. LIC’s IPO was considered very important for the government, as it would have helped it achieve its disinvestment target. This step was very important to keep the fiscal deficit under control.

Edited By: Siddharth Priyadarshi

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