Casualty Actuarial Society

Research

Compilation of Variables Necessary for Performing Dynamic Financial Analysis of Insurance Companies

A Final Report for Stage 1 of the DFA Project submitted to the CAS DFA Liasion Committee

Author: James R. Garven

Keywords: dynamic financial analysis

Abstract: In recent years, a virtual consensus has emerged within the casualty actuarial science community that actuaries must broaden their role in insurance organizations by developing a set of tools that will enable them to render expert opinions regarding not only loss reserves but the overall value and solvency of the firm as a whole. In order to support this effort to broaden the roles of casualty actuaries, the Casualty Actuarial Society has embarked upon a many-year, multi-stage project entitled Dynamic Financial Analysis. This aim of the project is to set up a general actuarial framework for the modeling and financial evaluation of insurance companies as risk-assuming, ongoing entities. The outcome of the project will likely be general specifications for insurance company financial models, a database of important variables to support these kinds of models for the purposes of research and model design, and suggested procedures and considerations for those who would design, use and interpret these models. This is the final report for stage 1 of the Dynamic Financial Analysis project.

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