The changing business environment in non-life insurance and reinsurance sector has raised the need for new quantitative methods to analyse the impact of various types of strategic decisions on a company’s performance.
Dynamic Financial Analysis (DFA) has become a popular and useful tool among financial professionals to cope with these new requirements.
DFA is a simulation approach that looks at an insurance enterprise's risks holistically as opposed to traditional actuarial analysis, which analyses risks individually. It is a systematic approach based on large-scale computer simulations for the integrated financial modelling of non-life insurance and reinsurance companies aimed at assessing the risks and the benefits associated with strategic decisions. It allows decision makers to understand and quantify the impact and interplay of the various risks that their company is exposed to, and ultimately to make better informed strategic decisions of the following area: business mix, reinsurance, asset allocation, profitability, solvency, compliance and sensitivity.
Output from a DFA model is used to determine a firm’s ﬁnancial condition based on the likelihood of its developing ﬁnancial difficulties on the basis of its current operating conditions.
We provide consultancy service to insurance and reinsurance companies to make comparisons of various reinsurance approaches to determine the most suitable reinsurance methods and structures.