- July 15, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Why in the news?
Shares of Life Insurance Corporation of India (LIC) gained about a per cent on the BSE after the insurance giant on Thursday reported the Indian Embedded Value (IEV) rise.
The Embedded Value (EV):
- Embedded value is the sum of the net asset value and present value of future profits of a life insurance company.
- This measure considers future profits from existing business only, and ignores the possibility of introduction of new policies and hence profits from those are not taken into account.
- In other words, it measures the consolidated value of shareholders’ interest in the life insurance business. It represents the present value of shareholders’ interests in the earnings distributable from the assets allocated to the business after sufficient allowance for the aggregate risks in the business.
|Cause of EV Jump:
The amendment to Section 24 of the LIC Act, brought prior to commencing the IPO, segregated the previously single ‘Life Fund’ into participatory and non-participatory funds.
Impact on IEV: