A Primer on Non-Life Insurance Ratios Craig Thorburn
About this module The Core Curriculum Objective of the module –Examine a non life insurer’s financial returns –Interpret the results –Make recommendations Designed for self study –Step by step through the material –Work on the example in the paper. – with questions Seek a local mentor –Some questions have a local answer
Structure of Core Curriculum
The Supervisory Process Financial Returns from Companies (ICP12) Reports on Market Analysis (ICP11) Ratio Analysis and Assessment (ICP12) Other Qualitative Analysis and Assessment (ICP12) Supervisory Conclusions and next steps (ICP4)
Why To form an opinion on the strength and prospects of the insurer Part of an early warning system Part of risk based supervision To check compliance with legal requirements
Health Warnings Averages can hide valuable information Accounting information is a critical input so results are only as good as the quality of the information Indicative rather than conclusive RESULT: Many times the suitable response will be to seek more detailed information or do additional research.
Outline of the paper Business Trends Reinsurance Profit Technical Provisions Assets Solvency and Capital Other Stress Testing or Scenario Testing
A Primer on Non-Life Insurance Ratios Business Trends
Premium Growth Gross, net, written, earned, by class of business, business segment, in total
Renewals Depends on information collected
Per Risk Premiums Requires collection of some measure of risk
A Primer on Non-Life Insurance Ratios First Break