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April 2000 Seminar

A Rating Agency’s View on Valuation. April 2000 Seminar. Matthew C. Mosher AVP & Actuary A.M. Best Company. Discussion Outline. Rating Process vs. Valuation Process Quantitative vs. Qualitative Analysis Summary & Questions. A.M. Best Presentation. Rating vs. Valuation. Valuation

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April 2000 Seminar

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  1. A Rating Agency’s View on Valuation April 2000 Seminar Matthew C. Mosher AVP & Actuary A.M. Best Company

  2. Discussion Outline • Rating Process vs. Valuation Process • Quantitative vs. Qualitative Analysis • Summary & Questions A.M. Best Presentation

  3. Rating vs. Valuation • Valuation • Current Value • PV of Future Operations • Sustainability of Operations • Rating • Capitalization • Operating Performance • Market Profile A.M. Best Presentation

  4. Best’s Capital Adequacy Model (BCAR) Ongoing Earnings Stream / Capital Generation Liquidity / Cash Flow Holding Company / Capital Structure Financial Flexibility Quality of Capital Reinsurance Program Capitalization Quantitative vs. Qualitative A.M. Best Presentation

  5. Underwriting Profitability Return on Equity Return on Premium Reserve Adequacy Changes Return on Assets Expense Structure Quality/Sustainability of Earnings Management Quality Price Monitoring Reserve Development Operating Efficiency Operating Flexibility Operating Performance Quantitative vs. Qualitative A.M. Best Presentation

  6. Spread of Risk Market Share Catastrophe Leverage Market Risk Competitive Market Position Distribution Effectiveness Event Risk Market Profile Quantitative vs. Qualitative A.M. Best Presentation

  7. Probably More Qualitative In the Long-Term, Very Little Difference Short Term Viability Issue Liquidation Value Summary A.M. Best Presentation

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