Not all shareholders of Life Fund: Many ordinary investors forget that the company’s policyholders own 5 percent of Life Insurance Company’s life fund. Only 3 percent is owned by companies or shareholders. If the life fund of a listed life insurance company is 5 rupees, then the shareholder’s share (owner) is more then Tk. This is called net asset value (NAVPS) for the life insurance company’s share in the big bang.
It is now possible to establish a basis for valuation of the shares of companies by reference to this hypothetical NAVPS of a life insurance company. However, it would not be entirely logical to take it literally. Because the fund’s quality and ability to generate revenue are also a factor.
Instead of looking at how the size of the life fund is increasing or decreasing in total, investors need to look at how much of the new life insurance policy is coming from the premium, and how much of the old asset is coming from inflation. If the premium contribution of the new policy is higher then the company will understand the business growth. And the growth of old funds is a measure of the company’s investment efficiency, meaning that the company is efficiently building and managing its portfolio.
There is a difference between a skilled manager holding an investor with 5 rupees and the same amount of money in an inefficient hand. Basically, the share price of the company will be above 5 rupees or not. The track record of growth and business efficiency will also be added during valuation.