MCEV – the quest for market consistency

If you believed in the validity of market-consistent embedded value (MCEV) as a metric for valuing insurance companies at the end of 2008, then Allianz Life, the US subsidiary of Munich-based Allianz, must have looked an interesting takeover prospect. MCEV’s harsh treatment of embedded guarantees and long-dated products means Allianz Life was worth €3.3 billion (£2.7 billion) – a 215% fall in the company’s MCEV in the space of a year. So if MCEV was a truly accurate reflection of company value,