Embedded Value (Insurance)

Definition

An actuarial valuation methodology used to value life insurance companies, representing the present value of future profits from the existing book of insurance policies (the value of in-force business) plus the adjusted net asset value of the company. Embedded value is the standard valuation framework for life insurers and is analogous to the net asset value plus intangible asset value approach used in other industries. European Embedded Value (EEV) and Market Consistent Embedded Value (MCEV) are the two principal methodologies.