Embedded Value
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Vanshika Gupta.
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Vanshika Gupta
Description: What is Embedded Value(EV) and how is it measured?
The embedded value measure considers future profits from existing business only and ignores the possibility of introduction of new policies and hence profits from those are not taken into account.
The embedded Value of a life insurance company is the present value of future profits plus adjusted net asset value (NAV). It is a construct from the field of actuarial science which allows insurance company to be valued.
It is calculated by adding present value of future profits of a firm to the net asset value of the firm’s capital and surplus. It sometimes know as market consistent embedded value (MCEV).
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