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Provided by: FitchTraining Introduction to Life Insurance Financial StatementsInsurance |
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Training
Provided by FitchTraining
A one-day introductory level workshop, covering the key components of a life insurance companya s statutory (SAP) and GAAP financial statements and the key ratios to analyse financial strength.
Related Awards, Degrees or Certifications: Earn CPD credits
We are an accredited training provider with a number of institutions including:
ACCA
NASBA
Securi
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Introduction to Life Insurance Financial Statements
Course Objectives
The overall goal of this workshop is to understand the key components of a life insurance company s statutory (SAP) and GAAP financial statements and apply key ratios to analyse financial strength. Specifically, participants will learn to:
Evaluate the risks inherent in the main products offered by life insurance companies and recognise how they are reflected in the financial statements
Compare and contrast the statutory (SAP / blue book) and GAAP statements in order to assess balance sheet, income statement and cash-flow financial strength
Calculate and apply basic ratios to quantify a life company s performance, risk based solvency and risk profile.
Target Audience
This programme is designed for analysts, who have limited experience in the analysis of insurance company financial statements. A parallel workshop Introduction to Property & Casualty Financial Statements covers the P&C sector. These workshops are designed as a preparation for the intermediate level US Insurance Company Analysis workshop.
Content
INSURANCE MARKET INTRODUCTION
Key activities and products
Risk profile for differing products: insurance versus investment products
Insurance products: individual term, group life and disability, income protection etc.
Investment products: fixed and variable annuities, guaranteed investment contracts, universal life, whole life, endowment, retirement and mutual funds etc.
Contract type: term, permanent, annuity, continuous disability
Premium type: single or regular; group or individual
Investment basis: fixed, variable, stable value, interest-sensitive, with profits.
STATEMENT LOGIC
Financial statements
Relating the business to the balance sheet, income statement and cash-flow
Income recognition: premiums versus policyholder fees on deposits
Benefits: death, annuities, maturities, surrenders, increase in reserves
Reserves: life insurance reserves, policyholder deposits, policyholder dividends,
Reinsurance impact on assets, liabilities, premiums and benefits.
Intangible and other assets: deferred acquisition costs, goodwill.
Accounting and disclosure
Key differences statutory accounting practices (SAP) versus GAAP: solvency versus going concern
Investment accounting: cost versus fair value; impairment rules, unrealised gains and losses;
Statutory reserves: XXX and AXXX life reserves; interest maintenance reserve, asset valuation reserve
Reserving policies: realistic versus prudent assumptions; new business strain and other challenges of life reserves
Expenses: deferral of acquisition costs;
Key focal points: solvency versus profitability
SAP blue book: risk based capital, non admitted assets; reserve exhibits; schedules D, S and T; dividend capacity
GAAP accounts: on going profitability, group leverage
Reconciliation of GAAP and SAP accounts.
RATIO ANALYSIS
Performance risk
Key performance indicators, benchmarks and signals of strong and weak performance
Income breakdown and expense control.
Investment risk
Asset and liability management: duration, liquidity
Investment leverage: stress testing for write downs
Investment returns: realised and unrealised.
Financial risk
Liquidity and leverage: liquidity ratio; liability and financial leverage
Solvency: risk based capital and ratio guidelines; quality of capital: core capital and surplus notes.
Closing case study
Financial analysis of a life insurer.
The overall goal of this workshop is to understand the key components of a life insurance company s statutory (SAP) and GAAP financial statements and apply key ratios to analyse financial strength. Specifically, participants will learn to:
Evaluate the risks inherent in the main products offered by life insurance companies and recognise how they are reflected in the financial statements
Compare and contrast the statutory (SAP / blue book) and GAAP statements in order to assess balance sheet, income statement and cash-flow financial strength
Calculate and apply basic ratios to quantify a life company s performance, risk based solvency and risk profile.
Target Audience
This programme is designed for analysts, who have limited experience in the analysis of insurance company financial statements. A parallel workshop Introduction to Property & Casualty Financial Statements covers the P&C sector. These workshops are designed as a preparation for the intermediate level US Insurance Company Analysis workshop.
Content
INSURANCE MARKET INTRODUCTION
Key activities and products
Risk profile for differing products: insurance versus investment products
Insurance products: individual term, group life and disability, income protection etc.
Investment products: fixed and variable annuities, guaranteed investment contracts, universal life, whole life, endowment, retirement and mutual funds etc.
Contract type: term, permanent, annuity, continuous disability
Premium type: single or regular; group or individual
Investment basis: fixed, variable, stable value, interest-sensitive, with profits.
STATEMENT LOGIC
Financial statements
Relating the business to the balance sheet, income statement and cash-flow
Income recognition: premiums versus policyholder fees on deposits
Benefits: death, annuities, maturities, surrenders, increase in reserves
Reserves: life insurance reserves, policyholder deposits, policyholder dividends,
Reinsurance impact on assets, liabilities, premiums and benefits.
Intangible and other assets: deferred acquisition costs, goodwill.
Accounting and disclosure
Key differences statutory accounting practices (SAP) versus GAAP: solvency versus going concern
Investment accounting: cost versus fair value; impairment rules, unrealised gains and losses;
Statutory reserves: XXX and AXXX life reserves; interest maintenance reserve, asset valuation reserve
Reserving policies: realistic versus prudent assumptions; new business strain and other challenges of life reserves
Expenses: deferral of acquisition costs;
Key focal points: solvency versus profitability
SAP blue book: risk based capital, non admitted assets; reserve exhibits; schedules D, S and T; dividend capacity
GAAP accounts: on going profitability, group leverage
Reconciliation of GAAP and SAP accounts.
RATIO ANALYSIS
Performance risk
Key performance indicators, benchmarks and signals of strong and weak performance
Income breakdown and expense control.
Investment risk
Asset and liability management: duration, liquidity
Investment leverage: stress testing for write downs
Investment returns: realised and unrealised.
Financial risk
Liquidity and leverage: liquidity ratio; liability and financial leverage
Solvency: risk based capital and ratio guidelines; quality of capital: core capital and surplus notes.
Closing case study
Financial analysis of a life insurer.
About The Training Provider: FitchTraining
FitchTraining - Fitch Training is a specialist training firm focused on the provision of credit and corporate finance training. Courses are offered in three areas: financial institutions, corporate credit and securitization. Fitch Training is part of Fitch Solutions, a division of the Fitch Group. We also work in partnership with Fitch Solutions to provide quantitative training.
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