Financial Analysis of Insurance Companies
Understand the unique analysis methods needed to assess the financial strength and operating performance of insurance companies in the US.
CPE Credits: 14
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Module 1: Introduction
- Industry overview and analysis
- Recent scandals and shenanigans
- Emerging issues and challenges
Module 2: Regulatory Environment
- Evolution & Background
- Role of the NAIC
- State vs. federal regulation
- Likely outcomes of recent financial crisis
Module 3: The Insurance Operating Cycle
- Premiums
- Claims
- Reserving
- Investment income
- Operating expenses
- Adjustments
Module 4: Statutory vs. GAAP Comparisons
- Solvency vs. going concern concept
- Admitted vs. non-admitted assets
- Reserving methods
- Statutory liabilities
- Acquisition costs
- Revenues & expenses
- Capital & surplus
Module 5: Asset Valuation
- Invested assets: bonds, stocks, real estate, mortgage loans, receivables, deferred taxes, goodwill and intangibles
- Impairment tests
- Receivables
- Deferred acquisition costs (DAC)
Module 6: Liability Valuation
- Case & IBNR reserves
- Policyholder benefits
- Claim reserves
- Annuity reserves
- Loss adjustment expense (LAE)
- Unearned premium reserve (UPR)
- Deposit liabilities
Module 7: Capital & Surplus
- Capital stock
- Surplus notes
- Unassigned funds
- Treasury stock
- Risk-based capital (RBC)
Module 1: Reinsurance Transactions
- Reasons for reinsurance
- Types of reinsurance
- Affect of reinsurance on operations
- Reinsurance assets
- Reinsurance liabilities
- SAP vs. GAAP differences
- Finite risk reinsurance
- Testing for risk transfer
- Accounting for finite reinsurance
Module 2: Financial & Rating Agency Measures
- Capacity ratios
- Liquidity ratios
- Leverage ratios
- Profitability ratios
- Affect of holding companies
- Financial ratings: What do they mean?
Module 3: Capital Adequacy Analysis
- Statutory solvency analysis
- NAIC's risk-based capital (RBC) formula
- Rating agency capital adequacy measures (BCAR)
- Warning signs of financial difficulties
Module 4: Risk Management & Hedging
- Rising importance of ALM
- Types of risks
- Hedging programs
Module 5: Mergers & Acquisitions
- Recent M&A activity
- Valuation approaches
- Assumption reinsurance transfers
Module 6: Financial Forecasting
- Correlating combined ratios with ROE goals
- Life & health forecasting methods
- Economic value analysis
Module 7: IFRS: A Looming Challenge
- Evolution and background
- Insurance Project Phase I
- Insurance Project Phase II
- Exposure draft
- Industry comments
- Current developments