New business margin

New business margin in a profit measure used by insurers. The measurement of new business (the equivalent of sales when calculating profit margins in other industries) is less straightforward than similar numbers in other industries. It is common practice to use the present value of net new business (PVNBP), and in the EU this would be the EEV measure.

Given this:

new business margin = profit on new business ÷ PVNBP

The profit number used also needs to be calculated on a basis consistent with the PVNBP denominator. For example, if PVNBP is an EEV number, then the profit number should be the EEV profit on those sales.

As with most of the important insurance numbers, new business margin is sensitive to actuarial assumptions.

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