Book Value per Share

An insurer's shareholders' equity divided by shares outstanding -- the net asset value backing each share, and the primary valuation anchor for insurers (which are typically valued on price-to-book). Growth in book value per share plus dividends is the truest measure of the value an insurer creates over time. A subtlety for insurers: a big chunk of the balance sheet is a bond portfolio marked to market, so unrealized gains and losses on those bonds (accumulated other comprehensive income, or AOCI) swing book value with interest rates even when the underlying business is unchanged -- which is why insurers also report book value ex-AOCI and tangible book value to show the operating trend.

Related terms

Absorption Rate · AFFO per Share · Allowed Return on Equity · Alternative Investments · Anchor Tenant · Assets Under Management

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