Life Insurance Corporation of India’s (LIC's) Indian embedded value (IEV) grew marginally to ₹5.41 lakh crore as of March 2022 compared with ₹5.39 lakh crore as of September 2021, noted Business Standard in a recent report. However, it added that the life insurer's value of new business (VNB) margin grew by 580 basis points to 15.1 percent during this period due to the diversification of its product mix.
"The increase in the IEV was marginal as the insurer took a ₹40,000-crore hit from its investments. This was partially offset by the sharp rise in VNB margins. According to the data released by LIC on Thursday, its IEV as of March 31, 2022, stood at ₹5,41,492 crore compared with ₹5,39,686 crore on September 30, 2021, and ₹95,605 crore on March 31, 2021," the report informed.
LIC's VNB for the year ended March 31, 2022, was ₹7,619 crore compared to ₹4,167 crore for the year ended March 31, 2021, up almost 83 percent.
In the past, analysts have said that LIC’s balance sheet and, in turn, EV remain very sensitive to equity market movements, pointed out the report, adding that Milliman Advisors' report on LIC’s EV mentions that a 10 percent fall in equity markets corresponds to a 6.5 percent fall in EV.
“We are going through a phase where the equity values have depreciated and that is a concern. But as long as India remains a growth story, it will add value to us going forward. With the corporation’s focus on growing business with an increased focus on non-par business, the proportion of core business will automatically increase and equity will come down," a senior LIC official told BS.
"LIC is looking to introduce more non-par products in the market. On an APE basis, non-par is about 7 percent of LIC’s portfolio and it plans to take it to 12 - 15 percent in 3-4 years. Along with the product strategy, LIC is also looking to diversify its distribution strategy by focusing a lot more on the bancassurance channel," BS stated in the report.
