Dynamic Financial Analysis - Understanding Risk and Value Creation in Insurance

Peter Blum and Michel Dacorogna
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Peter Blum: Converium

Abstract: The changing business environment in non-life insurance and reinsurance has raised the need for new quantitative methods to analyze the impact of various types of strategic decisions on a company’s bottom line. Dynamic Financial Analysis («DFA») has become popular among practitioners as a means of addressing these new requirements. It is a systematic approach based on large-scale computer simulations for the integrated financial modeling of non-life insurance and reinsurance companies aimed at assessing the risks and the benefits associated with strategic decisions. DFA 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. In this brochure, we provide an overview and assessment of the state of the industry related to DFA. We investigate the DFA value proposition, we explain its elements and we explore its potential and limitations.

Keywords: reinsurance; dynamic financial analysis; insurance (search for similar items in EconPapers)
JEL-codes: G22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-cmp, nep-ias and nep-rmg
Date: Written 2003-06-18
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP A4; pages: 22 ; figures: included
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpri:0306002

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