Insurance embedded value (EV + new business)
Splits a life insurer into the value of policies already in force and the value of continuing to write new business; the standard way insurers are valued.
- Guide level
- Practical
- Output
- Intrinsic value
Core formula
Appraisal value = embedded value + value of one year's new business × new-business multipleHow to interpret it
Splits a life insurer into the value of policies already in force and the value of continuing to write new business; the standard way insurers are valued.
The output should be read as a scenario or decision aid, not as a guaranteed price target. Compare it with at least one method based on different economic assumptions.
Practical workflow
- Normalize the latest public financial and operating data.
- Choose assumptions that match the company's economics and accounting structure.
- Calculate conservative, base and optimistic cases where the method permits.
- Compare the result with market pricing and an independent valuation method.
- Document the assumptions that drive the largest changes in value.
Key limitation
Embedded value rests on actuarial assumptions (investment return, risk discount rate, lapses); the new-business multiple is derived from a two-stage growth path for new-business value, discounted at the same risk discount rate the insurer uses for its embedded value.
How Stockinsky uses it
Stockinsky uses this framework only when the company type and available data support it. Professional valuations expose assumptions, sources and warnings instead of presenting false precision.