Why subtract any of it, since cash is not really cash?...
(2) Of course any insurance company is going to have all or most of its float invested in fairly short-term fixed income securities...

The answer to the first bit is simply the second bit, nothing fancy.

My thinking was like this: an average portfolio is worth its face value, because most of the time most of the assets have a decent average earnings yield. It's worth what it earns. A portfolio with its hands partly tied, with forever some average "extra" allocation to cash earning on average nothing after tax and inflation, is worth less than its full face value because of that.

It sounds a bit harsh, but remember that my method doesn't subtract debt or the float liability!

Another way to look at it: It's a stake in the ground between the extremes of saying float is never a liability at all so all investments in effect belong to shareholders, and saying that the bookkeeping reality is 100% true and shareholders don't have any value interest in the assets held against that liability. Both extremes seem implausible, so I picked a 70/30 split. Investable float isn't worth zero, it isn't worth 100% as much as completely unfettered assets, so I estimated that it's worth maybe 70% as much.

Jim