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Provided by: FitchTraining Early Warning Signals in Insurance CompaniesInsurance |
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Training
Provided by FitchTraining
A two-day masterclass for experienced insurance analysts offering an insight into the causes and early warning signals of credit deterioration and failure in property and casualty (non-life), life and reinsurance companies. The workshop reviews both local and international cases of credit distress or failure to identify common themes and financial, non-financial and market indicators of deterioration. This workshop is a follow up to the Insurance Company Analysis workshop.
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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Early Warning Signals in Insurance Companies
Course Objectives
The aim is to equip participants with the knowledge and skills to proactively:
Apply a structured analytic approach, incorporating qualitative, quantitative and market indicators, to identify vulnerable exposures.
Highlight the key vulnerabilities of the different types of company: life, non-life (P&C or General), reinsurance.
Review failed and deteriorating case studies to identify key themes that recur in challenged insurance companies.
Stress test insurance company solvency and earnings for investment or underwriting losses, negative spread, reserve deficiencies etc.
Target Audience
The workshop is targeted at an advanced level for experienced credit risk managers and fixed income investors who are already familiar with the key analytic tools for analysing insurance companies. The workshop aims to cover a wide variety of troubled institutions in short case studies. For analysts seeking a more in depth overview of how to analyse insurance companies, we recommend our introductory and intermediate level workshops: Introduction to Insurance Financial Statements, Insurance Company Analysis and US Insurance Company Analysis.
Content
Analytic overview
Signs of distress
Common themes in troubled insurance companies: external vs. internal factors and contagion risk
Symptoms of a company s deteriorating credit standing: financial, non-financial and market indicators.
Structured analytic approach
Four-step approach to focus on key issues: purpose, payback, risks and structure
Purpose of the exposure and sources of payback: ability to refinance in normal vs. stressed conditions, level, volatility and location of cash-flow, challenges to downsizing assets, likelihood of government or parental support
Risks to repayment: Key macro, sector and company specific business and financial risks which might jeopardise repayment
Structure: structural subordination policyholder priority, the diverging recovery prospects of stakeholders in distressed insurers.
operating environment
Key macro-economic and sector trends, which are likely to erode creditworthiness.
Investment and underwriting cycles
Differing vulnerabilities by sector: life, non-life and reinsurance
Changes in regulation, tax or accounting; implications of increased solvency requirements.
management and shareholders
This section will focus on comparing management responses to soft markets and negative spreads.
Risky or inappropriate strategies, signs of desperation
Significance of ownership structure: mutuals, conglomerates etc.
The importance of franchise
How to recognise weak management and lack of integrity
business risk
This section will focus on companies with challenged business models and companies in crisis.
The significance of size, age and growth rate
Investment risk: stress testing write-downs, key asset and liability management (ALM) challenges, effectiveness of hedges, concentration risk, aggregation of exposures across asset and liability classes
Underwriting risk: pricing and modelling challenges
Reinsurance risk: credit and dispute risk in reinsurance, over-reliance on reinsurance, gaps in cover
Reserve adequacy: legacy exposures and loss reserve triangles in non-life: reserving for embedded guarantees or longevity risk in life
Regulatory risk: relative vulnerability of sectors.
FINANCIAL RISK
This section will focus on the adequacy of capital and stability of funding.
Capital adequacy: reliability of solvency formulae, ability of capital to withstand underwriting, investment or other shocks
Leverage: limits to an insurance company s ability to leverage
Double leverage: challenges of a leveraged holding company
Importance of financial flexibility
Liquidity: potential cash-flow shocks; liquidity of investments.
The aim is to equip participants with the knowledge and skills to proactively:
Apply a structured analytic approach, incorporating qualitative, quantitative and market indicators, to identify vulnerable exposures.
Highlight the key vulnerabilities of the different types of company: life, non-life (P&C or General), reinsurance.
Review failed and deteriorating case studies to identify key themes that recur in challenged insurance companies.
Stress test insurance company solvency and earnings for investment or underwriting losses, negative spread, reserve deficiencies etc.
Target Audience
The workshop is targeted at an advanced level for experienced credit risk managers and fixed income investors who are already familiar with the key analytic tools for analysing insurance companies. The workshop aims to cover a wide variety of troubled institutions in short case studies. For analysts seeking a more in depth overview of how to analyse insurance companies, we recommend our introductory and intermediate level workshops: Introduction to Insurance Financial Statements, Insurance Company Analysis and US Insurance Company Analysis.
Content
Analytic overview
Signs of distress
Common themes in troubled insurance companies: external vs. internal factors and contagion risk
Symptoms of a company s deteriorating credit standing: financial, non-financial and market indicators.
Structured analytic approach
Four-step approach to focus on key issues: purpose, payback, risks and structure
Purpose of the exposure and sources of payback: ability to refinance in normal vs. stressed conditions, level, volatility and location of cash-flow, challenges to downsizing assets, likelihood of government or parental support
Risks to repayment: Key macro, sector and company specific business and financial risks which might jeopardise repayment
Structure: structural subordination policyholder priority, the diverging recovery prospects of stakeholders in distressed insurers.
operating environment
Key macro-economic and sector trends, which are likely to erode creditworthiness.
Investment and underwriting cycles
Differing vulnerabilities by sector: life, non-life and reinsurance
Changes in regulation, tax or accounting; implications of increased solvency requirements.
management and shareholders
This section will focus on comparing management responses to soft markets and negative spreads.
Risky or inappropriate strategies, signs of desperation
Significance of ownership structure: mutuals, conglomerates etc.
The importance of franchise
How to recognise weak management and lack of integrity
business risk
This section will focus on companies with challenged business models and companies in crisis.
The significance of size, age and growth rate
Investment risk: stress testing write-downs, key asset and liability management (ALM) challenges, effectiveness of hedges, concentration risk, aggregation of exposures across asset and liability classes
Underwriting risk: pricing and modelling challenges
Reinsurance risk: credit and dispute risk in reinsurance, over-reliance on reinsurance, gaps in cover
Reserve adequacy: legacy exposures and loss reserve triangles in non-life: reserving for embedded guarantees or longevity risk in life
Regulatory risk: relative vulnerability of sectors.
FINANCIAL RISK
This section will focus on the adequacy of capital and stability of funding.
Capital adequacy: reliability of solvency formulae, ability of capital to withstand underwriting, investment or other shocks
Leverage: limits to an insurance company s ability to leverage
Double leverage: challenges of a leveraged holding company
Importance of financial flexibility
Liquidity: potential cash-flow shocks; liquidity of investments.
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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