Embedded Value


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Embedded Value

The value of a company that is calculated by adding together its adjusted net asset value and the present value of potential future profits. That is, the embedded value considers what the owners of the company have received in the past and what they are likely to receive in the future. Embedded value is an inherently conservative valuation method, excluding intangible assets and assuming that earnings will not increase in the future. The measure is most common outside North America, especially in the insurance industry.
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The return on embedded value in 2010 was 11%, Storebrand said in presentation materials, released ahead of its investor day today.
Ultimately, the IPO price and its valuation is determined by the company and its underwriters, who gauge the specific embedded value figure that mutual fund investors are comfortable with, hoping to find a number that encourages the best demand.
Some companies have started implementing an economic capital approach and others have initiated limited pilot studies to begin gauging the impact of market-consistent embedded value and aspects of International Financial Reporting Standards and Solvency II.
We are very excited to have completed the very first Canadian embedded value securitization," said Alan Ryder, President and CEO of Aurigen Capital Limited.
Great Eastern CEO, Khor Hock Seng, said, 'We continued to see sustained and positive growth during Q2-17 in our key operating metrics such as Group Profit Attributable to Shareholders, New Business Embedded Value and Total Weighted New Sales.
The acquisition is complementary to Chesnara's UK life books and is seen to be enhancing to the embedded value and cash generation ability of Chesnara in the medium term, upon integration, the buyer has said.
Several investors questioned the embedded value accounting methods used to value AIA, the FT said.
Operating profit on the less forgiving market consistent embedded value fell to pounds 978million from pounds 1.
Embedded value has long been used, especially in Europe, to measure the underlying risk and value of insurance liabilities.
Britain's third biggest insurer saw its shares price go up by 6% after it announced the half-year rise in operating profits, from pounds 589m to pounds 626m, based on a European embedded value (EEV) industry standard.
Securitizing embedded value in these insurance products is done by determining the embedded value of future profits, Brockwell's presentation showed.
The group's embedded value figure - an industry measure which smoothes future profits from life assurance and pensions business - increased by more than City expectations to pounds 881m.
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