 Assessing the Financial Stability of Insurance Companies by Analyzing the Dynamics of Cash FlowsA.V. Larionov Journal of Applied Economic Research, 2020, vol. 19, issue 2, 208-224 Abstract: The presented research is dedicated to analysis of the possibility of using information about of cash flow trends to assess the financial stability of insurance companies. The significant role of insurance organizations in economic development determines the need to develop an approach to monitoring their sustainability. Improving the accuracy of monitoring will allow the Bank of Russia to support insurance companies before bankruptcy. Existing approaches involve analyzing the actual values of indicators, reflecting the position of the insurance company in various areas of activity. The purpose of this study is to assess the possibility of using information about the trends in cash flows in predicting the default of an insurance company. The dynamics of cash flows is an indirect indicator of the internal environment of the insurance company. This study suggests using information about changes in the main financial indicators, as well as the structure of the insurance portfolio. In the study, binary probit regressions were constructed, which confirmed the possibility of using indicators of the trends in cash flows of insurance companies as indicators of stability. The constructed regressions included two groups of indicators: financial indicators and indicators of insurance activity. The results of the empirical assessment confirm the possibility of using increases in insurance performance indicators to determine the stability of insurance organizations. The statistical significance of the indicators of cash flow dynamics was confirmed, including indicators of growth of insurance liabilities, insurance reserves, as well as growth of insurance premiums for certain types of insurance. In this regard, this category can be separated into a class of indicators that are used to assess financial stability. Based on the calculation of the unobservable logistics effect, all insurance companies are classified as stable and unstable. The results can be used by the Bank of Russia in expanding the set of indicators used for monitoring the activities of insurance companies Keywords: insurance companies; cash flows; financial stability; insurance activities; risks; cash; insurance premiums (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:aiy:jnjaer:v:19:y:2020:i:2:p:208-224 DOI: 10.15826/vestnik.2020.19.2.011 Access Statistics for this article Journal of Applied Economic Research is currently edited by Igor Mayburov More articles in Journal of Applied Economic Research from Graduate School of Economics and Management, Ural Federal University Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.