Life embedded value

Embedded Value (EV) is an actuarially determined estimate of the value of a company, excluding any value attributable to future new business. With reference to the covered business, and to the relevant consolidation perimeter (i.e. the operating life, health and pension companies of the Group), the EV is equal to the sum of the Adjusted Net Asset Value and the Value In-Force.

Adjusted Net Asset Value (ANAV) corresponds to the consolidated market value of the assets backing the shareholders’ funds, net of taxes and policyholder interests on any unrealised capital gains and losses, after the elimination of goodwill and DAC, net of other adjustments required to maintain consistency with the valuation of the in-force business, and before the payment of dividends from profits of the year.

Value In-Force (VIF) is the present value of the projected stream of after tax industrial profits that are expected to be generated by the covered business in force at the valuation date, after allowance for:

  • the cost of financial guarantees and options granted to policyholders;
  • the frictional costs of holding the required capital;
  • the cost of non hedgeable risks.

Embedded Value Earnings correspond to the difference between the closing and the opening EV, excluding adjustments to opening EV and capital movements.

Operating Embedded Value Earnings correspond to Embedded Value Earnings, net of economic variances and other non operating variances.

Normalised Embedded Value Earnings correspond to Operating Embedded Value Earnings, net of other operating variances.

New Business Value (NBV) is the present value, at the point of sale, of the projected stream of after tax industrial profits expected to be generated by the new business written in the year, after allowance for:

  • the cost of financial guarantees and options granted to policyholders;
  • the frictional costs of setting up and holding the required capital;
  • the cost of non hedgeable risks.

Full year NBV is calculated as the algebraic sum of the NBV of each quarter, each of them calculated with beginning of period operating and economic assumptions.

Annual Premium Equivalent (APE) is defined as new business annualised regular premiums plus 10% of single premiums.

Present Value of New Business Premiums (PVNBP) is defined as the present value of the expected future new business premiums, allowing for lapses and other exits, discounted to point of sale using the reference rates.

Internal Rate of Return (IRR) is defined as the rate that makes equal to zero the present value of new business distributable profits (therefore allowing for new business first year industrial strain and required capital absorption) calculated using "real-world" best estimate assumptions.

Payback Period is the period of time (in years, from issue date) required to recover the cost of the initial investment in new business (i.e. new business first year industrial strain and required capital absorption) calculated by means of a deterministic projection of distributable profits based on “real-world” best estimate assumptions.

Implied Discount Rate (IDR) is the discount rate that, when applied to a deterministic projection of future distributable profits based on "real-world" best estimate assumptions, produces the same value as that arising from the market consistent valuation.

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Life EV roll-forward87.58 KB
FY13 Life Embedded value sensitivity74.04 KB
Expected Life cash flow generation86.26 KB
Update on Guarantees32.18 KB
Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328