LIC valuation dips Rs. 40,000 cr on stock market fall, rising rates

Life Insurance Corp. of India (LIC) has suffered a Rs. 40,000 crore hit on its valuation due to the extended fall in equity markets and rising interest rates affecting yields from its debt investment, a top executive said.

“The equity market fall has impacted the valuation of equity investment holdings by LIC,” an executive director of the country’s largest life insurer said at a conference call hosted by chairman M.R. Kumar.

“The rising interest rate has impacted the value of bonds, government securities and other fixed income papers. These have been factored in while calculating the latest Indian embedded value of LIC. The mark-to-market losses have been around Rs. 40,000 crore since September till 31 March, 2022. However, the policy sales business has grown and that’s how the net growth in EV is Rs. 2,000 crore,” he said. The insurer’s board met earlier in the day.

For every 10% fall in equity market, LIC’s embedded value decreases by 6.5%, said the insurer.