| The life insurance business is a long-term one. Contracts usually run for many years and involve complex payment flows. As a result, it is difficult to measure exactly how much value a life insurance business may represent or how much income it can be expected to generate over time. Embedded value is a tool used by many insurance companies to overcome this problem. This thesis reviews the developing history of international and national research results, disclosures the actuarial principles that lies behind embedded value, explains the specific steps in the calculation of embedded value. Then, further comment is given out on the application of embedded value. it analyze the reason why Initial Public Offerings'stock price of the life insurance should be priced in the base of EV in order to reflect the real value of a life insurance company. it point out the drawback of profits analyses of mortality, expenses and interest. The variance analysis of EV is more useful in help the life company to source of profits. Theory of embedded value can be used in the management process of marketing too. While now in china, the study on EV and its use in life insurance companies is fewer,I hope that this paper will deepen the understanding of embedded value theory and provide some clues when pushing EV into management of value improvement. |
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