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 Investments / Assets
Underwriting / Liabilities
Both Together / Balance Sheet
Holborn and Brown Brothers share a common business philosophy
and a commitment to long-term service for successful insurance
companies. We also were both pioneers in the use of dynamic
financial analysis (DFA) to find the optimal business strategies.
DFA has become increasingly important in our work. We will
present today case studies of how our clients use these tools to
improve their results and control risk.
We welcome the chance to explore this with your further, on
assets or liability issues, or as a joint assignment addressing the
entire enterprise.
Agenda
What is DFA?
What is Asset Allocation?
What is Risk?
How does DFA improve Asset Allocation?
What is DFA?
Dynamic financial analysis is NOT a forecast of the future!
DFA tries to determine the ability of the company’s capital and
surplus to adequately support the company’s future operations
through a currently unknown future environment
Three goals:
- information on interaction of decisions from different areas
- quantitative look at trade offs
- structured process for evaluating alternative operating plans
What is in a DFA Model?
Assets
- Current holdings
- Sell/buy rules
- Returns
Liabilities
- Reserves
- New business
- Loss models
Corporate
Uses of DFA
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| Strategic Uses |
Operational Uses |
| Strategic planning |
Asset allocation |
| Capital adequacy |
Reinsurance |
| Capital allocation |
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| M&A |
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| Ratings management |
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| Product development |
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| Claims management |
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| Liquidity |
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