– Look beyond profit — check solvency and underwriting – Key metrics = VNB, APE, combined ratio – Balance sheet strength matters more than usual
Key Metrics to Analyze
– Embedded Value (EV) – Net worth + future profits – VNB (Value of New Business) – Profit from new premiums Combined Ratio – For general insurers, <100% is ideal
What Healthy Financials Look Like
– Rising VNB margins and APE – Consistent persistency ratio (60%+ at 61st month) – Low claim settlement ratio with high solvency
Common Red Flags to Avoid
– High lapse or claim ratio trends – Flat or falling embedded value over years – Sharp rise in expense ratio
Investment Insights
– Always check VNB growth vs peers – Compare 3-year persistency and solvency trends – Choose insurers with improving underwriting margins