Financial condition reporting (slides)

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What does "financial condition" mean? Insurance company risk. Methods of modelling individual risks. Insurance as a means of mitigating risk. "Bringing it all together". Tail dependency. Risk measures. Importance of distribution of outcome. Loss insolvency free assets including: Goodwill below target return. Above target return. Free tangible assets. Who is interested in what? FCR covers all aspects though some stakeholders may only be interested in part of the result. Shareholders want high risk adjusted returns. Policyholders want security at the most cost effective price. FSA wants companies to have "adequate resources". Adequate resources. Meet customer liabilities even if things go wrong - probabilities not defined. Resources include: Capital. Reinsurance. Procedures and IT systems. Guarantees (if enforceable). Contingent capital. Qualified staff. Firm (insurers, banks, etc) must (as part of business plan) test ability to cope.