Financial Analysis of Insurance Companies

New York Institute of Finance

How long?

  • 2 days
  • in person, online

New York Institute of Finance

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Who should attend

Financial analysts, credit analysts, ratings analysts, underwriting managers, consultants, and accountants

About the course

Understand the unique analysis methods needed to assess the financial strength and operating performance of insurance companies in the US.

CURRICULUM

Day 1

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)

Day 2

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

WHAT YOU'LL LEARN

  • Describe major industry trends and challenges
  • Explain the insurance industry's regulatory environment
  • Describe the operating cycle of an insurance company
  • Compare and contrast statutory and U.S. GAAP accounting
  • Describe the impairment tests for invested assets
  • Differentiate between loss reserves, policy reserves, UPR and IBNR reserves
  • Identify the components on an insurer's capital and surplus
  • Describe the nature and purpose of reinsurance
  • Identify the key elements of risk transfer in a reinsurance agreement
  • Conduct ratio analysis to assess an insurer's financial condition and results
  • Explain the methodologies used by rating agencies
  • Describe the key components of the NAIC's risk-based capital (RBC) formula
  • Identify warning signs of an insurer experiencing financial distress
  • Predict how changes in key variables might affect an insurer's financial results
  • Describe how insurance companies manage financial risk
  • Describe the impact of international accounting (IFRS) on the insurance industry
  • Refresh your knowledge of key insurance terms and concepts.

Financial Analysis of Insurance Companies at New York Institute of Finance

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