insurance-life-developed-value

name	insurance-life-developed-value
description	Valuation criteria for developed market life insurance using Embedded Value (EV) methodology. EV Multiple 0.6-1.0x, PVFP + ANAV calculation, and why P/E is unreliable for life insurers.
metadata	{"sector":"insurance","sub_sector":"life","scope":"exclusive","market":"developed","stock_type":"value"}

Life Insurance — Developed Markets Value Strategy

Primary Method: Embedded Value (EV) Multiple + New Business Value

Key Metrics

Metric	Formula/Target	Interpretation
Embedded Value (EV)	PVFP + ANAV	PVFP = Present Value Future Profits; ANAV = Adjusted Net Asset Value
EV Multiple	Price/EVPS	0.6-1.0x typical for mature insurers (conservative)
PVFP (Value in Force)	NPV of profits from current policies	Declining as in-force book runs off
Adjusted Net Asset Value	Capital + Surplus adjusted to market	Balance sheet valuation
New Business Contribution	Annual profit from new policies written	Sustainability of EV growth

Why Embedded Value for Life Insurance

• EPS/P/E ratio highly distorted by: accounting depreciation, one-time gains, policy surrenders
• MCEV (Market Consistent Embedded Value) provides clearer picture of shareholder value creation
• Common in Europe and Asia; less used in North America

Valuation Process

1. Calculate EV (PVFP + ANAV)
2. Compare P/EV multiple to peers and historical average
3. Assess sustainability: Is EV growing or declining?
4. Examine new business profitability (profitable growth = multiple expansion potential)