Book Value

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The value of a life insurance company, measured by its assets minus its liabilities.

For life insurance companies, book value is determined by starting with the original cost of an underlying asset (e.g. a bond), which is then adjusted by the accumulated depreciation of the asset (the depreciation that’s been expensed against the asset over its “useful life”), unamortized premium and discount (the portion of premiums and discounts on bonds which have not been amortized over the life of the bond yet), deferred origination and commitment fees (fees related to loans and other obligations, recognized over the life of the liability), direct write-downs (an adjustment for devaluation of an asset to reflect its current market value), and adjustments (change in value or price of an underlying asset or property).

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