What is Actuarial Appraisal Value and Why Does It Matter?

Actuarial Appraisal Value (AV) is commonly discussed in the context of insurance transactions, but its role is often misunderstood.

An actuarial appraisal value is a model-based assessment of the value of an insurance business, derived from its expected future performance under a defined set of assumptions. It provides a structured actuarial view of value and is widely used as a foundation for pricing discussions, strategic decision-making, and negotiation preparation.

At a high level, actuarial appraisal value can be expressed as:

Actuarial Appraisal Value = Net Asset Value (NAV) + Value of In-Force (VIF) + Value of New Business (VNB)

Each component captures a different dimension of the business and reflects different drivers of value.

Importantly, actuarial appraisal valuation should not be treated as a one-off exercise triggered only by transactions. Performing appraisal valuations on a regular basis allows management to:

• Understand what is driving value

• Monitor how value evolves over time

• Assess the impact of strategic and operational decisions

• Identify issues early and take corrective action

When a transaction is eventually contemplated, the seller should already have a clear understanding of the value and its drivers — rather than trying to form that view for the first time during the transaction process.

In this way, actuarial appraisal valuation supports informed decision-making and provides a disciplined foundation for pricing discussions, even though the final transaction price is ultimately shaped by negotiation and market dynamics.

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