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Chapter 15

K

kimiko

Very Active Member
In the calculation of EV, what does "release of shareholder-owned net assets" mean? Why not just net assets, why do we need to say release and shareholder-owned?
 
kimiko said:
In the calculation of EV, what does "release of shareholder-owned net assets" mean? Why not just net assets, why do we need to say release and shareholder-owned?
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Hi Kimiko
Embedded values are designed to place a value on the company for shareholders. So they should only include the shareholders' share of the net assets. A with-profits fund might have shared ownership, for example the policyholders might own 90% and the shareholders own 10%, so the EV should only allow for 10% of the net assets. More detail is in SA2.
I agree that we don't need to say release.
Best wishes
Mark
 
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