Macquarie, the world’s largest asset manager and Australia’s top ranked adviser, released a report in which said the inclusion of 262 new products compared to just 94 products earlier will help increase value of New Business (VNB) for the LIFE INSURANCE CORPORATION (LIC) future earnings expected to be generated through the new policies.
The increase in products will result in an increase in VNB by 150 to 350 basis point over the next 3 years. Embedded Value (EV), a key measure of LIC’s profitability, has been damped during quarter (April-June) FY23 by the 40000cr Mark To Market (MTM) impact on bond and equity investments diluted the gains from the higher VNB.
EV impact was muted due to MTM hits taken on equities and bond book, the VNB margin reported at 15% for FY22 was way ahead of our estimation of ~10% for FY22. It does not move the third party cover much contribution of New Business Value to overall EV is just around 1%.
