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Understanding Insurance Balance Sheet: Key Metrics and Analysis

This presentation by Amara Gondal explores the components of an insurance balance sheet as of October 28, 2010. It covers crucial topics such as underwriting assets versus liabilities, the importance of investment diversification, and the analysis of financial ratios, including Premium Solvency and Reserves Solvency Ratios. The discussion emphasizes capital adequacy in relation to underwriting business and loss reserves, alongside liquidity management within the context of an ever-evolving interest rate environment and credit risk assessment.

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Understanding Insurance Balance Sheet: Key Metrics and Analysis

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  1. General Insurance Balance SheetOctober 28, 2010 Presenter: Amara Gondal

  2. Underwriting Assets Vs. Liabilities u/w Provision u/w Provision u/w Provision u/w Provision

  3. INVESTMENTS Bank Deposits Governments Securities Equities – Listed Mutual Funds Debt Securities – Listed CoI/ Debentures/ Unlisted TFCs/ Placements Equities – unlisted Investment properties Historical Performance Credit Risk Market Risk Total return Risky investments Asset valuation Yield Diversification of portfolio Interest rate environment Default experience Guidelines Liquidity Systems & Controls Maturity

  4. Balance Sheet Analysis Level of capital in relation to underwriting business and reinsurance 1. Premium Solvency Ratio [Equity/NPW] 1a. Premium Solvency Ratio (Market Value Adjusted) [Adjusted Equity/NPW] Level of capital in relation to adequacy of loss reserve 2.Reserves Solvency Ratio [Net Provision for Outstanding Claims/Equity] 2a. Reserves Solvency Ratio (Market Value Adjusted) [Net Provision for Outstanding Claims/Adjusted Equity] 3. Net Underwriting Provisions / Equity 4. Financial Base / NPW LIQUIDITY 1. Liquid Assets / Net Underwriting Provisions 1a. Liquid Assets (Market Value Adjusted) / Net Underwriting Provisions 2. Liquid Assets / Total Assets Profitability Capital adequacy Solvency Financial flexibility

  5. _ THANK YOU

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