What is embedded value (EV)?
Embedded Value(EV ) is one of the indicators representing the corporate value of life insurance companies, that is attributed to shareholders. EV is the sum of "adjusted net worth," which is the accumulation of realized profits, and "value of in-force business," which is estimated future profits on in-force business.
It takes time to realize accounting profits under current statutory accounting practices applicable to life insurance companies. Meanwhile, EV is able to reinforce financial information for a single year in accordance with statutory accounting standards as EV recognizes the contribution of profits expected in the future upon conclusion of a policy.