2026-01-20 02:22:57

When it comes to insurance company investments, many people jump to conclusions based solely on surface data, which is far from enough. Truly knowledgeable investors need to dig deeper.

First, look at **Net Assets**—this is the company's foundation. If the foundation is unstable, even the best projects are pointless.

Next, examine the **Effective Business Value** (also called Residual Margin)—this represents the "high-quality property" that has already been built on the foundation and is currently operating. The annual rental income is a steady stream of profit that can last for many years. This value is often overlooked.

Finally, consider the **New Business Value**—equivalent to a real estate development project in progress. It determines how much new "property" can be added in the future to participate in rent collection. This directly impacts long-term growth potential.

Therefore, a truly scientific valuation method cannot focus only on the surface of financial statements. It must simultaneously weigh three aspects: how strong the current foundation is, how long the existing profit pool can sustain, and how great the future growth potential is.

Interestingly, many market participants still stay at the first level of understanding, only focusing on net assets as the foundation. Little do they realize that the latter two layers of value are the key to determining the long-term investment value of an insurance company.

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RetiredMiner

· 13h ago

The key is the actual business value; most people really haven't seen through it. --- Remaining margin, this is the moat of insurance stocks. Unfortunately, few people pay attention to it. --- This real estate analogy is quite vivid. The value of new business is easily underestimated. --- To put it simply, it's about looking at both stock and flow; you can't just blindly buy based on net assets. --- No wonder so many people have hit a wall; they haven't fully understood these three layers of logic. --- It's interesting; it seems most retail investors are just playing a game based on a single indicator. --- The latter two layers of value are indeed implicit and require effort to analyze financial reports.

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ZeroRushCaptain

· 13h ago

Another one teaching me how to read reports, I just want to ask—how did you personally get started with the first level of understanding?

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VitalikFanboy42

· 13h ago

The effective business value is indeed easy to overlook; most retail investors simply can't see it. The production logic of Bitcoin is somewhat similar: what can be produced now, what can be produced in the future, and where is the production capacity limit. In simple terms, net assets only look at the past, while the latter two are about the future. The real moat for insurance companies lies in the stable cash flow from existing assets. Good article, but most people still only pay attention to the stock price, haha.

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BakedCatFanboy

· 14h ago

These three-layer value models indeed clarify the valuation logic of insurance companies, but in practice, most retail investors still tend to fall into traps. The real estate analogy is very vivid, and the part about effective business value is indeed easy to overlook. Wait, why is the valuation of new business so difficult? It seems to carry much more risk than the first two layers.

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