An index used to adjust state scheme premiums to reflect levels of market values of UK equities and gilts. For an individual quoted security this is usually taken as being half way between the most recently quoted bid and offer prices. For unlisted securities it can either be the price at which trade last occurred, or an estimation of what the current price would be if a trade occurred now. This term is used in connection with unitised with-profit contracts. It is a discretionary adjustment that a company may make to the bid value of the units under a contract when a payment is made at maturity, surrender or on death.
Some practitioners use the term for positive and negative adjustments.
Others use the term to refer to a negative adjustment, and a term like terminal bonus for any positive adjustment. The term most commonly refers to a negative adjustment on surrender. In many cases, negative MVAs cannot be applied on death or at maturity. The market value of a life insurance company's assets is the value that it would get if it sold them in the open market, given a willing buyer and a willing seller. An investment is marketable if it can be sold quickly and without affecting the market price.