Let’s face it: It is nearly impossible to find useful, substantial information on insurance modeling and valuation anywhere (I’ve looked many times!).
That’s why we added a set of 13 bonus lessons on introductory insurance modeling and valuation to this Bank & Financial Institution Modeling course.
It’s not a comprehensive treatment of insurance, but it is sufficient for interviews. And best of all, it’s short – only 6 hours of training, which is ideal for weekend cramming or last-minute prep before interviews.
Here’s what you get in this set of bonus lessons:
First, you’ll start with an overview of insurance modeling and how insurance companies differ from both commercial banks and “normal companies.”
Then, you’ll delve into insurance accounting: How companies record premiums and revenue, including Gross Written Premiums, Ceded and Assumed Premiums, and Net Written and Earned Premiums.
You’ll understand how the premiums are reflected in the financial statements and how they affect items such as the Unearned Premium Reserve (UEPR). You’ll also learn how the premiums “flow” from Direct Written Premiums down to Net Earned Premiums.
On the expense side, you’ll learn how Losses & LAE, Commissions, and other line items are recorded, and how insurance companies create “Loss Triangles” based on cash vs. book differences.
Next, you’ll see examples of real financial statements from a property & casualty (P&C) insurance company (Travelers Companies) and life insurance company (MetLife), and you’ll understand the key differences between them.
After these introductory lessons, we delve into a simplified 3-statement model and valuation for a new P&C insurance company, which covers:
- Premium and Loss projections, including how ceded losses flow through the statements.
- Balance Sheet and Cash Flow Statement projections, including how the reserves, Deferred Acquisition Costs, Cash, Investments, and Equity change.
- Statutory adjustments and key metrics and ratios, including the Combined Ratio, the Solvency Ratio, and how to calculate Statutory Net Income and the Statutory Capital & Surplus.
- Example comparable public companies, including sample selection criteria and key valuation multiples.
- A Dividend Discount Model based on a minimum Solvency Ratio, and a Net Asset Value (NAV) model.
After this 3-statement model, you’ll get an overview of embedded value, which is a key valuation methodology specific to life insurance.
Finally, we wrap up with a comparison of P&C and life insurance companies and explain the business model, financial statement, and valuation differences.
Again, this Bank Modeling course focuses on commercial banks and lending firms, so these bonus lessons do not represent a comprehensive treatment of insurance.
However, it is a very useful “crash course” that will get you through interviews and let you answer insurance-related accounting and valuation questions crisply and effectively.
We could sell this set of lessons separately for $100, but it’s yours for free once you sign up for the Bank & Financial Institution Modeling course.
By the end of this module,
you’ll be able to discuss insurance company modeling, accounting, and valuation with confidence. You’ll understand the key business model differences, how insurance firms differ from commercial banks, and how P&C differs from life insurance. And you won’t be caught off-guard when insurance-related questions come up in interviews.
Sign up now to take advantage of this offer and receive FREE access to this set of 13 bonus lessons on Insurance.
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