# Embedded-value securitization

- Canonical URL: https://www.gerhardmerk.de/embedded-value-securitization
- Post ID: 593477
- Modified: 2023-07-25T20:59:57+00:00
- Language: en

## Definition

Form of securitization in the insurance industry. In this case, the risk from a life insurance portfolio (pool) is transferred to a special purpose entity, which acts as a reinsurer. The special purpose vehicle passes on the risks from the policy portfolio - primarily mortality, longevity, lapse rate, regularity of premium payments, deterioration in the creditworthiness of the primary insurer - to investors by issuing securitized securities in several tranches and with different tranche thicknesses. In order to relieve the investors in the tranches of the multi-layered risks, portfolio insurance is sometimes offered here - although this then reduces the yield (return-reducing). In line with the content of the primary insurance policies, the maturities of these securitized securities are very long, often ten years or more. - Embedded value refers to the value of an insurance portfolio. This is calculated from - the adjusted net asset value, defined as the balance sheet equity plus the valuation reserves attributable to the owners of the company (valuation reserve: hidden reserves less hidden charges) plus - the present value of future net profits from the portfolio. - See Absence capitalism, Asset-backed securities, Poison securities, Insurance-linked securities, Pandemic, Premium arrears, Retrocession, Risk sharing, Securitization, XXX-Insurance-linked securitization. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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