BASICS OF ACCOUNTING Its importance in actuarial world Baltic Actuarial Summer Days 2008, Estonia Kristīne Lomanovska, Inga Helmane

Financial statements Balance sheet Profit and loss statement (Income statement) Cash flow

Balance sheet Standard company ASSETS Fixed assets Intangible assets Tangible assets Financial assets / Investments Current assets Stock Debtors/ Accounts receivable Cash EQUITY Capital Accumulated net profit and profit of the period LIABILITIES Long term liabilities Short term liabilities Use of capital Source of capital Resources of the firm How are the resources financed

Balance sheet Insurance company ASSETSEQUITY AND LIABILITIES InvestmentsCapital Accumulated net profit Profit of the period Insurance liabilities Reinsurance contract assets DebtorsCreditors Accrued income and deferred expenses, including DAC Accrued expenses and deferred income Other debtorsOther creditors Cash

Profit and loss account or income statement Standard company EXPENSES What we pay PROFIT (EARNINGS) REVENUES What we receive as income at our disposal

Profit and loss account or income statement Insurance company EXPENSES Claims incurred, net Other technical expenses Net operating expenses Investment expenses LOSS OR REVENUES Earned premium, net Other technical income Investment income PROFIT