Net Value Created: Measuring a Non-Life Insurer's Performance

Zeitschrift für die gesamte Versicherungswissenschaft (2013), 102(3), pp. 237–255

Posted: 29 Sep 2013

See all articles by Matthias Schmautz

Matthias Schmautz

Independent

Niklas Lampenius

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Date Written: September 28, 2013

Abstract

The measure Net Value Created (NVC) captures periodic deviations of planned for and realized net present values at a specific reporting date. Therefore, NVC provides control-related signals about the company’s performance additional to economic value added/residual income measures. In this paper we adopt the NVC to the Flow to Equity approach, commonly used in non-life insurance company valuation. In a multi-period context the NVC allows for an update of information over time regarding planned for and realized values and, it further allows for a separation of value contributions of the main insurer’s business units and value contributions due to a change in cost of capital. Thus, NVC is useful for value-based performance measurement in the retrospect and for strategic (investment-) decision support in the prospect for non-life insurance companies.

Keywords: non-life insurer’s performance, residual income, valuation

Suggested Citation

Schmautz, Matthias and Lampenius, Niklas, Net Value Created: Measuring a Non-Life Insurer's Performance (September 28, 2013). Zeitschrift für die gesamte Versicherungswissenschaft (2013), 102(3), pp. 237–255, Available at SSRN: https://ssrn.com/abstract=2332727

Matthias Schmautz

Independent ( email )

Niklas Lampenius (Contact Author)

University of Hohenheim - Faculty of Business, Economics and Social Sciences ( email )

Stuttgart, 70593
Germany

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