Anyone who studies insurance knows that the insurance industry has several proprietary financial indicators, the most important of which are embedded value (EV) and New Business Value Creation Ability (NEV). Embedded value is the value of the existing company, which is equivalent to the net assets of other industries, regardless of the company's future new business sales ability. Therefore, the insurance industry also uses PEV to value insurance, which is equivalent to PB valuation of other industries. We know that insurance companies can use PB-ROE valuation, but they use a deformed PB-ROE, in which PEV replaces PB and ROEV replaces ROE, forming a PB-ROEV valuation system. For an insurance company with high EV growth rate (high ROEV), it is natural to give a higher PEV multiple.
A very important part of embedded value's growth is the new business value creation ability (NEV), which is the most important index to determine the growth rate of EV. This is also the most important indicator for us to observe the prosperity of the industry at this stage.
Test your anti-risk index, and experts will interpret it for you for free!