DEFINITION of 'Annual Premium Equivalent - APE'
A common sales measure technique used by insurance companies in the United Kingdom where the sales of a given entity are estimated by taking the value of regular premiums, plus 10% of any new single premiums written for the fiscal year. The premiums earned by a firm can be extended to include all revenues of a given firm.
INVESTOPEDIA EXPLAINS 'Annual Premium Equivalent - APE'
When estimating any future metric, it is important to consider any unforeseen events, and how these events may impact your estimate. For example, when forecasting a firm's sales revenues, you would want to consider the competition and what there product lines and pricing strategy will be over the forecasting period.
This will allow you to fine-tune your estimate, which will hopefully be more applicable, and provide you with a margin of safety.
![Insurance jargon explained - Page 12](/cdn-cgi/image/width=600,quality=80,format=webp/https://cdn.relayto.com/images_originals/55bb1fafbdb38.jpeg)