Insurance credit analysis
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Insurance provides an essential service to the economy allowing Individuals and corporates to reduce their risks by transferring them to insurers. Insurance is a very sizeable sector with $5 trillion of worldwide premiums collected annually and $30 trillion assets under management: What happens if an insurer cannot honor its claims? It could expose savers, pensioners, policyholders, corporations and other creditors to severe financial losses. This is the reason why customers, investors and regulators should learn how to assess insurers financial strength.
Understanding an insurers’ strategy, its balance sheet strength, its risks exposures, the quality of its operational and risk management practices, and emerging risks and trends they face are must haves to form a view on their financial strength.
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The course will develop the main factors influencing the financial strength of an insurer:
The business environment as shaped by country and sector risks in which the insurer operates
Own competitive strengths and differentiators allowing the insurer to secure good business inflows, stable cash and profitability
The balance sheet strength, including risk adjusted capital adequacy and its potential volatility
Liquidity risk and potential off-balance sheet risks
Funding abilities vs. growth policy and strategic ambitions
Operational management, business strategy and risk management policies
At the end of the course, you will be able to analyze the strengths and weaknesses of an insurers with regards to the different building blocks, and to combine them into an opinion on its overall financial strength. Examples and case studies will help through the different modules of the course.
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The course is intended for
Fixed income or Equity analysts
Investors and Asset managers
Actuaries and Risk managers
Chief Financial Officers and Chief Executive Officers engaging in M&A strategy
Regulators
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We adjust to your needs. The “sweet spot” is 3 days, providing enough time for all topics and practice team through case studies and credit committees. We can condense or extend the program, but we always dedicate time for practice as it remains the best way to learn. Class sizes are limited to 20 analysts.
Below is an illustration of a 3 day program.
Pre-course: Online introduction to credit risk
The 5 modules and the short test require 4 – 6 hours of work depending on participants’ familiarity with the topic. The 5 modules include:
Dimensions of credit risk
Measurements of credit risk
Cycles, bubbles and crises
Funding sources and the capital structure
Credit rating agencies and credit ratings
The rest of the program will be announced shortly.
In the classroom
Day 1
9:00 - 11:00
General introduction: Insurance in the economy, Life and Non-Life, regulatory and accounting trends, How do business and related risks build up?
Assessing insurers’ financial strength: analytical framework overview + Break
11:00 - 12:30
Business environment: country and sector risks with case study
12:30 - 1:30
Lunch
1:30 - 5:00
Competitive position + Break
5:00 - 5:30
Wrap up DAY 1; setting up activity for DAY 2
Day 2
9:00 - 11:00
Balance sheet strength and capital adequacy with case study + Break
11:00 - 12:30
Sources of internal and external funding with case study
12:30 - 1:30
Lunch
1:30 - 5:00
Liquidity risk with case study
5:00 - 5:30
Wrap up DAY 2; setting up activity for DAY 3
Day 3
9:00 - 11:00
Management & Strategy + Break
11:00 - 12:30
Case study: assessing strategy, operating and risk management
12:30 - 1:30
Lunch
1:30 - 5:00
Bringing it all together: propose a credit recommendation (case study)
5:00 - 5:30
Course wrap up