The Financial Community’s Needs From Actuaries In Due Diligence. A CFO’s Perspective Presented at the CAS Annual Meeting Washington, DC November, 2000 by Gayle Haskell, FCAS, MAAA CFO & Chief Actuary, Providence Washington Insurance Companies. A PERSPECTIVE ON M & A’s.
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A CFO’s Perspective
Presented at the CAS Annual Meeting
Gayle Haskell, FCAS, MAAA
CFO & Chief Actuary, Providence Washington Insurance Companies
“SYNERGIES” COME & GO; FINANCIAL IMPACTS LAST
Reprinted Courtesy of ‘Schiff’s Insurance Observer’
- Reserve evaluation
- Economic valuation
- Rate adequacy assessment
FINANCIAL COMMUNITY SEEKS MORE !!
Example: “Market Value”, and Market Caps ($B)12/9910/00 Amazon $ 36 $ 10 Ins Web 1 .06 AIG 172 214 Marsh & McLennan 24 32
Concisely Articulate & Stand Behind Your Recommendation!
Improves Input Quality & Personal Credibility
- Return horizon: “accretive to EPS by 2nd year”?
- cash flow demands?
Commercial Lines Companies ‘97‘98‘99 # Organizations 796 781 746 U/W Cash Flow ( 4.3) (10.1)(17.8)Investment Inc. 21.8 22.2 21.4
CONSTRAINTS, AND CONSOLIDATED CONSIDERATIONS, MAY OUTWEIGH TARGET’S STAND ALONE VALUE
PUT SKIN IN THE GAME DILIGENCEPUT SKIN IN THE GAME
AVOID PERCEPTION MORE IMPORTANT TO NOT BE WRONG - THAN - TO BE HELPFUL
- risks to financial proforma
- target’s asset allocation vs. financial goals
SEEK TO BE:
More than: THE TEAM’S BEST TECHNICIAN
Optimally: THE TEAM’S MVP