Advanced Insurance Analysis

Course Properties

Course date: 15-10-2017
Course End Date: 19-10-2017
Location Cairo

Course Objective:
               Participants will be equipped to:
               • Identify the business and financial risks inherent in the life, non-life, reinsurance, and banc-assurance industries
               • Distinguish strong and weak performers by sector using both qualitative and quantitative analysis and detect early warning signals

                   of changing credit quality
               • Evaluate financial statements in the context of differing accounting standards and business practices
               • Appreciate how economic, competitive, and regulatory issues impact strategy
               • Use a structured approach to identify key exposure risks and mitigate when dealing with insurance companies.

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Who Should Attend:
       This program is designed for fixed income, banking, insurance, and credit risk professionals. It is targeted at an intermediate level and assumes a basic understanding of accounting and insurance products.

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Course Contents:
              • ANALYTIC OVERVIEW
                                 o Purpose/payback model: a structured approach to credit
                                 o Insurance ratings: insurer financial strength and security ratings; capital models and other tools of analysis
                                 o Debt and equity investors: use of market indicators to evaluate credit risk

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              • OPERATING ENVIRONMENT
                           Macro economic issues
                                 o Current state of the life and non-life insurance industry
                                 o Insurance versus general economic cycles; impact of capital markets
                                 o Sector growth dynamics and key drivers

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                          Sector analysis
                                 o Key business and product risks inherent in general, life and reinsurance
                                 o Sector dynamics: industry growth, cyclicality and competitive factors
                                 o Re-insurance: differing contract types

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                          Regulation and supervision:
                                 o Key methods of regulating insurance companies: solvency ratio, investment and business restrictions
                                 o International benchmarks and differences between countries; European vs. US model
                                 o Degree of comfort from quality of supervision

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               • FINANCIAL FUNDAMENTALS
                           Statement logic
                                 o Focal points of analysis: assets vs. liability risk
                                 o Key accounting issues: premiums, claims and reserves, investment valuation
                                 o Accounting principles: statutory, modified statutory, IAS, embedded value


                              
                           Business risk
                                 o Underwriting risk: assessing the quality and diversity of the underwriting portfolio, loss and combined ratios
                                 o Product risk - life: traditional, endowments, unit linked etc.
                                 o Reserve adequacy: adverse development, survival ratios
                                 o Re-insurance risk: utilization policy, credit and recovery risk
                                 o Investment risk: quality and liquidity of the investment portfolio; asset and liability matching

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                           Performance risk
                                 o Diversity and stability of income: underwriting, investment and operating returns
                                 o Investment return: impact of cash yield, realized and unrealized gains and losses
                                 o Control of distribution and operating expenses
                                 o Embedded value techniques for measuring life profitability; key assumptions in calculating value of life insurance

                                    business in force

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                           Financial risk:
                                 o Liquidity: operating cash flow and liquid investments to match potential drains
                                 o Solvency: regulatory requirements and market norms; assessing resilience and quality of capital, alternative measures

                                      e.g. free asset ratios and resilience tests
                                 o Gearing: financial leverage, refinancing risk, debt servicing
                                 o Sector / peer analysis
                                 o Non-life: underwriting risk, reserves adequacy and capital
                                 o Life: focus on investment risk and free asset ratios
                                 o Re-insurance: focus on capital strength


                                
                           Early warning signals
                                 o Recognizing financial and non-financial indicators of distress
                                 o Accounting discrepancies

               • BANK-ASSURANCE
                                 o Differing business models
                                 o Double counting of bank and insurance capital: national differences between current and proposed

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               • MANAGEMENT AND FRANCHISE
                                 o Framework for assessing management and operational risk
                                 o Organizational concerns: double leverage, weak affiliates, inter-group support, capital and dividend flows
                                 o Franchise evaluating the strength of the business model

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              •  STRUCTURE
                                 o Funding needs of insurance companies: Who is the borrower / counter-party?
                                 o Hybrid capital securities: structure and type of capital issued; impact on credit standing and other concerns
                                 o Capital structure: creditor vs. policy-holder rights and the impact of ranking and structural subordination.

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