Embedded value

Abstract: Merger and acquisition transactions involving a life insurance company are particularly relevant to the professional actuary's work. This paper describes and critiques current approaches to determining actuarial appraisal values of life insurance companies. It proposes a new approach. It proposes more meaningful disclosure in connection with any appraisal valuation, and examines the nature of certain differences between an actuarial appraisal value and GAAP shareholder equity. This paper is intended primarily to address approach, interpretation, and concept. It does not discuss all matters that should be considered in determining a fair purchase/sale price for a life company.

Abstract: As academic entrepreneurship develops, questions of business valuation of research become more important. Therefore, there is a need to develop methods for value assessment of academic research. Conventional business valuation models for technology are usually financially oriented and will only disclose its economic value. However, this under specifies the value of university-industry transactions. The value of an invention not only depends on economic value but also on strategic, cultural or social value added to the applicant of the invention: usually a company. We introduce gross business value, being a function over time of these four dimensions of value and propose to position this gross business value of an academic technological invention within a three-dimensional model, with the research value creation process on the X-axis, the type of research on the Y-axis and its contribution to the applicant's four types of capitals at the Z-axis.

Abstract: Shareholder value depends on the intrinsic value of a company which, in turn, is driven by sales growth rate, operating profit margin, incremental capital investment, income tax and cost of capital (Rappaport, 1998). Often, there is confusion among professionals as to which of the value drivers are significantly contributing to value and on which they should focus to enhance value on a sustainable basis. In this paper, we make an attempt to list the value drivers of return on equity (ROE) and classify them as internal and external value drivers. Using the financial data of 112 companies listed on the Bombay stock exchange in India, for a period of seven years from 2000 to 2006, the impact of the value drivers on the ROE is quantified. By statistical analysis, some important value drivers which are sustainable in the long term and contribute significantly to value creation have been derived.