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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 amount an insurance company credits to you depends on a variety of factors (any of which can potentially be combined), such as: 1  Cap, which is an upper limit put on the return over a certain time period. 2  Participation rate, which is the percentage of the indexâs return the insurance company credits to the annuity.