The measure to measure the value of any insurance company is the embedded value
The country’s largest insurance company LIC has informed that as of March 31, 2022, the embedded value of LIC has been Rs 5.41 lakh crore. Whereas last year till March 31, 2021, its embedded value was Rs 95,605 crore. At the same time, as of 30 September 2021, its embedded value was Rs 5.39,686 crore. According to the information given by the company, the embedded value had increased due to the diversification of the fund after the changes in the LIC Act.
Actually, the measure to measure the value of any insurance company is the embedded value. It also includes the interest of the shareholders in the income from the allocated assets, apart from the funds reserved for the risks associated with the insurance business. This is a way to know the share value of the shareholders in the life insurance business.
The market capitalisation of LIC is Rs 4.50 lakh crore while the market value as per IPO price was Rs 6 lakh crore. LIC’s stock is still trading below its IPO price. Actually, the shares of LIC have been below their issue price since the listing. By the end of Thursday’s trading, LIC’s stock was down 0.91 percent at Rs 712.30, while the listing price of LIC IPO is Rs 949. Accordingly, LIC’s stock is still 25 per cent below its IPO price.