SNL Center for Financial Education

DAY ONE

Registration and continental breakfast opens at 7:30 a.m.
Program begins at 8:30 a.m.

INTRODUCTION AND OVERVIEW

• Summary of introductory materials
• Overview of insurance company credit
• Insurance company financial statements

FINANCIAL ANALYSIS – BALANCE SHEET

• Capital structure, quality of capital, and capital ratios
• Leverage
• Intangible assets
• Guarantees or support agreements
• Reinsurance
• Policy reserve composition
• Other assets and liabilities

PRACTICE EXERCISES

BALANCE SHEET – INVESTMENT PORTFOLIO

• Asset/investment leverage
• Investment portfolio composition
• Credit risk and interest rate risk
• Asset quality
• Affiliate investments

PRACTICE EXERCISES

P&C COMPANY ANALYSIS

Guest Instructor: Robert Farnam
Senior VP, Equity Research, Keefe, Bruyette, & Woods, Inc.

• Intricacies of analyzing P&C companies
• Understanding P&C reserves from a credit analysis perspective

CASE STUDIES AND Q&A

Day One concludes at approximately 5:15 p.m.

DAY TWO

Continental breakfast opens at at 7:30 a.m. Program begins at 8:30 a.m.

INCOME STATEMENT

• Key revenue sources and earnings drivers
• Impact of accounting rules on reported revenues and earnings
• GAAP vs. statutory operating earnings
• Quality of earnings
• How growth can cause operating losses
• Profitability

CASH FLOW

• Insurance company cash inflows and outflows
• Net-to-gross operating cash flow
• Regulated vs. non-regulated cash flows
• Organizational structuring to help cash flows
• Intercompany transactions
• Understanding and analyzing statutory statement schedule Y

LIQUIDITY

• Assessing holding company and operating subsidiary liquidity needs and position
• Assessing disintermediation and “run-on-the-bank” risk
• Liquidity of the investment portfolio
• Liquid assets vs. liquid liabilities

PRACTICE EXERCISES

ASSET/LIABILITY MANAGEMENT

• Understanding the characteristics of various liabilities
• Optionality embedded in policy reserves
• Importance of closely matching asset and liability durations
• Temptation to mismatch assets and liabilities

FINANCIAL FLEXIBILITY

• Capital needs, access to capital
• Financial leverage
• Coverage ratios
• Refinancing needs
• Holding company liquidity

STATE OF THE INDUSTRY

• Impact of the financial crisis
• Current outlook

CASE STUDIES

SUMMARY, CLOSING COMMENTS & Q&A

Day Two concludes at approximately 5:00 p.m.