LIC IPO: How the embedded value of the insurance behemoth was calculated

Shareholders get more say on how LIC treats its profit and policyholder's interest

When you buy an insurance cover for your car each year, the agent asks a question—what do you think is the value of the car! In insurance jargon it is the insured’s estimated value or IEV. 

It is this same question that LIC has been asked and which forms the basis of its share sale. What is the IEV of LIC? It has been reckoned upwards of Rs 5 trillion. 

To reach that number, the government of India has offered a change in how the largest life insurer distributes the surplus it receives from its business between the policy holder