The resulting figure, discounted by a given percentage point each year, is booked as operating profit when an annuity is sold. While the practice is widespread in the UK, it is relatively unknown elsewhere in Europe where only a few companies follow the practice. Indeed, many people dislike the idea of embedded value. I would have thought it's the analyst's job to look into the future and evaluate what will happen. He explains that the transition from an insurance conglomerate to long-term investment company has dramatically changed cash flow at Skandia, which under other accounting methods, would have meant underestimating the company's true profitability.
Annual reports are another.
In his view, many companies produce annual reports that are too long and packed with jargon. Skandia's report, in his view, once suffered from these shortcomings. For the most part, analysts agree, giving Skandia's revamped IR strategy the thumbs up, and reckon it has played an important role in helping to increase the company's market capitalisation from E2.6 billion in 1997 to a peak of almost E30 billion last year. But Skandia's Vos notes that it's important the company doesn't rest on its laurels. He lists beefing up Skandia's website as one of his immediate priorities.