Hostname: page-component-586b7cd67f-dlnhk Total loading time: 0 Render date: 2024-11-24T13:00:51.341Z Has data issue: false hasContentIssue false
  • English
  • Français

The valuation of general insurance companies

Published online by Cambridge University Press:  20 April 2012

J. P. Ryan  and
K. P. W. Larner
Get access Rights & Permissions [Opens in a new window]

Abstract

The paper presents a theoretical framework for the valuation of a general insurance company to actuaries, but also aims to provide reference work for non-actuarial users of appraised values. It distinguishes between the price that may be paid for an insurance operation from what may be called the economic or appraised value. The paper describes the elements of the appraised value calculation, selection of parameters, the uses of such evaluations and explores the future development into explicit stochastic modelling rather than the implicit methodology. Theoretical and practical considerations are illustrated and example valuations of a single line insurer are given.

Keywords

General InsuranceAppraisal ValuesModellingMergers and Acquisitions
Type
Research Article
Information
Journal of the Institute of Actuaries , Volume 117 , Issue 3 , December 1990 , pp. 597 - 669
Copyright
Copyright © Institute and Faculty of Actuaries 1990

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abbott, W. M. (1981). Some Notes and Various Aspects of Profit Analysis. Unpublished ASTIN paper.Google Scholar
Abbott, W. M. & Booth, G. (1976). Solvency. O.A.R.D.Google Scholar
Abbott, W. M., Clarke, T. C., Hey, G. B., Reynolds, D. I. W. & Treen, W. R. (1974). Some Thoughts on Technical Reserves and Statutory Reserves in General Insurance. J.I.A. 101, 217.Google Scholar
Abbott, W. M., Clarke, T. G. & Treen, W. R. (1981). Some Financial Aspects of a General Insurance Company. J.I.A. 108, 119.Google Scholar
Anderson, J. C. H. (1959). Gross Premium Calculations and Profit Measurement for NonProfitability Insurance. Transactions of the Society of Actuaries, XI.Google Scholar
Benjamin, S. (1976). Profit and Other Financial Concepts in Insurance. J.I.A 103, 233.Google Scholar
Benjamin, S. (1980). Solvency and Profitability in Insurance. Transactions of the 21st International Congress of Actuaries.Google Scholar
Brown, A. S. et al. (1988). Recognition of Life Assurance Profits. Institute of Actuaries Working Party.Google Scholar
Brubaker, R. E. (1979). A Constrained Profit Maximisation Model for a Multi-Line Property-Liability Company. Casualty Actuarial Society Discussion Paper.Google Scholar
Burrows, R. P. & Whitehead, G. H. (1987). The Determination of Life Office Appraisal Values. J.I.A 114, 411.Google Scholar
Coutts, S. M., Devitt, E. R. & Ross, G.A.F. (1984). A Probabilistic Approach to Assessing the Financial Strength of a General Insurance Company. International Congress of Actuaries ICA22.Google Scholar
Cummins, J. D. (1988). Capital Structure and Fair Profits in Property—Liability Insurance. Second International Conference on Insurance Solvency.Google Scholar
D'arey, S. P. & Garven, J. R. (1988). A Synthesis of Property-Liability Insurance Pricing Techniques. (Unpublished.)Google Scholar
Daykin, C. D., Bernstein, G. D., Coutts, S. M., Devitt, E. R., Hey, G. B., Reynolds, D. I. W. & Smith, P. D. (1987). Assessing the Solvency and Financial Strength of a General Insurance Company. J.I.A. 114, 227.Google Scholar
Daykin, C. D., Devitt, E. R., Khan, M. R. & Mccaughan, J. P. (1984). The Solvency of General Insurance Companies. J.I.A. 111, 279.Google Scholar
Daykin, C. D. & Hey, G. B. (1989). Modelling the Operations of a General Insurance Company by Simulation. J.I.A. 116, 639.Google Scholar
Fairley, W. B. (1979). Investment Income and Profit Margins in Property—Liability Insurance: Theory and Empirical Results. Bell Journal of Economics.Google Scholar
Feldblum, S. (1989). Asset Liability Matching For Property/Casualty Insurers. Casualty Actuarial Society Valuation Issues.Google Scholar
Hill, R. D. (1979). Profit Regulation in Property-Liability Insurance. Bell Journal of Economics.CrossRefGoogle Scholar
Kraus, A. & Ross, S. A. (1982). The Determination of Four Profits for the Property-Liability Insurance Firm. Journal of Finance.Google Scholar
Lee, R. E. (1985). A Prophet of Profits. J.I.A.S.S. 28, 1.Google Scholar
Loader, D. & Ryder, J. M. (1976). How much can we grow? General Insurance Bulletin, 1976.Google Scholar
Lowe, S. P. Discussion of Sturgis, R. W. (1981). Actuarial Valuation of Property-Liability Insurance Companies. Casualty Actuarial Society, LXIX.Google Scholar
Miccolis, R. S. (1987). An Investigation of Methods Assumptions and Risk Modelling for the Valuation of Property-Casualty Insurance Companies. Financial Analysis of Insurance Companies.Google Scholar
Noris, P. D. (1985). Asset Liability Management Strategies for Property and Casualty Companies.Google Scholar
Pentikäinen, T. & Rantala, J. (1982). Solvency of lnsurers and Equalisation Reserves. Helsinki.Google Scholar
Pentikäinen, T. et al. (1989). Insurance Solvency and Financial Strength. Finnish Insurance Training and Publishing Company Ltd.Google Scholar
Plymen, J. (1976). Profitability and Reserve Strength of Non-life Insurers. International Congress of Actuaries. ICA20.Google Scholar
Reid, D. H. (1984). Solvency: the Expression of the Relationship between Capital and Insurance Markets? International Congress of Actuaries ICA22.Google Scholar
Rushton, I. L. (1980). An Application of Model Office Techniques to the Solvency Question. A General Insurance Forecasting Model. International Congress of Actuaries. ICA21.Google Scholar
Smart, I. C. (1977). Pricing and Profitability in a Life Office. J.I.A. 104, 125.Google Scholar
Statement of Valuation Principles (1988). Casualty Actuarial Society Committee on Valuation Principles.Google Scholar
Sturgis, R. W. (1981). Actuarial Valuation of Property-Casualty Insurance Companies. Casualty Actuarial Society, LXVIII.Google Scholar
Tattersall, O. J. (1976). Expenses in General Insurance. O.A.R.D. Paper 16.Google Scholar
Taylor, G. C. (1984). Solvency Margin Funding for General Insurance Companies. J.I.A. 111, 173.Google Scholar
Wenner, D. L. & Leber, R. W. (1989). Managing For Shareholder Value—From Top to Bottom. Harvard Business Review. 1989.Google Scholar
Whitehead, G. H. (1989). Appraisal Values for Property and Casualty Insurance Companies for Merger or Acquisition. Casualty Actuarial Society Valuation Issues.Google Scholar