Valuation of the new business in the life insurance under Solvency II

It is usually sufficient to use data contained in any accounting to determine the current value of the company. However, for the life insurance, which it concludes insurance contracts for a longer period of time and therefore it may not largely reflect the real financial situation of the company. For this reason, it was introduced the Embedded Value, e.g. the value which reflects the value of future profits of insurance companies arising from the existing insurance portfolio. The introduction of Embedded Value and the subsequent transition to the Market-Consistent Embedded Value mean the significant progress in determining the value of the life insurance companies, in the financial reporting and in comparing insurance companies in the EU and in the context of Solvency II. In this article we will focus on determining the value of new business and the new business margin of the unit-linked life insurance.