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An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money.. Buffett also touches on what makes valuing an insurance company difficult.nsurance Valuation Insight. A couple of key metrics can be used to value insurance companies, and these metrics happen to be common to financial firms in general. These are price to book (P/B) and return on equity (ROE).
The Cash-Value Account. The cash-value account of a whole-life policy is similar to having a savings account within the policy. After the insurance company takes the amount of money it needs from the premium to meet the cost of term insurance, the extra dollars go into the cash-value account.