EARLY WARNING SIGNALS IN INSURANCE COMPANIES

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1 EARLY WARNING SIGNALS IN INSURANCE COMPANIES Leading Excellence in Insurance

2 Global Reach BIBF plays a vital role in the training and development of human capital in the Middle East and North Africa. Our commitment to excellence has strengthened our position as the leading educational provider across all major business disciplines. We serve As a partner to numerous world-class institutions; delivering thought leadership, assessment and training in the areas of Banking, Accounting & Finance, Assessment & Development, English & Business Communication, Human Resources, Information Technology, Insurance, Interpersonal Skills, Islamic Finance, Leadership & Management, Marketing, Sales & PR, and Project Management.

3 Partners Fitch Learning delivers learning and development solutions for the financial services industry. With centres in London, New York, Singapore, Dubai and Hong Kong; we are committed to questioning and understanding client needs across the globe and on the ground locally. Our people advise and build learning solutions to accelerate the achievements of the individual and the company, across the entire employee life-cycle. Part of the Fitch Group, Fitch Learning partner with clients to elevate knowledge and skills and enhance conduct. With centres in London, New York, Singapore, Dubai and Hong Kong; we are committed to questioning and understanding client needs across the globe and on the ground locally. Our people advise and build learning solutions to accelerate the achievements of the individual and the company, across the entire employee life-cycle. Trainer Biography: Nik Joshi Nik Joshi has been teaching Fitch Learning s Understanding Insurance Accounts and Insurance Company Analysis courses in Europe and the Middle East since Nik s experience in training in the finance sector ranges from financial reporting and statement analysis to liability estimation and reserving to asset valuation and investment strategy. He also trains on Solvency II and related issues such as financial reporting requirements, transparency and corporate governance requirements and practices. Nik Joshi has an extensive working knowledge of the Middle East and Asian regions and has delivered training on financial and insurance themes to all levels of audiences in the Middle East, Turkey, Asia, Africa, Europe and North America. Nik has worked with Insurance Companies, Regulatory Authorities, Industry Organisations and Governments to design and develop training courses to. Nik s extensive industry experience in various countries enables him to enliven his training with practical illustrations which generates enthusiasm and engagement in his training sessions. For more information visit:

4 EARLY WARNING SIGNALS IN INSURANCE COMPANIES Are you an experienced financial professional looking to take your skills to an advanced level? Fitch Advanced Corporate Credit course will guide you through the credit process and provide you with practical advice on what to do if problems occur. Top three reasons to take the Early warning signals course with Fitch Learning: 1. Highly interactive workshop to develop your critical judgement 2. Includes case studies to help you become more effective in assessing the success of a company s business model 3. Run by industry professionals who have experience working in this area and can pass their real life expertise on to you Why take this intensive course with Fitch Learning? Instructors You will be taught the subject matter and how to put the topics into context from experienced professionals who will provide easily digestible content using knowledge learned from many years in the industry. Up-to-date Content You will work through current, region-specific case studies taken from real companies so you can apply what you have learnt as soon as you get back to the office. Interactive You can practice what you learn before applying it in the workplace. The course is highly interactive with a maximum of 20 participants. The discursive style of training helps you develop confidence in your future decisions and analysis. Objectives The aim of this two-day course is to equip participants with the knowledge and skills to pro-actively: Apply a structured analytic approach, incorporating qualitative, quantitative and market indicators, to identify vulnerable exposures Highlight the key vulnerabilities of the different types of company, and different business lines within the life, P&C (non-life), and reinsurance sectors Review real case studies of failed and deteriorating insurers to identify key recurring themes Stress test insurance company solvency and earnings for investment or underwriting losses, overvaluation of assets and under-reserving Recognise the key challenges of credit exposures to vulnerable insurance companies and the triggers that might lead to downgrades or refinancing problems.

5 Content 1) Analytic Overview Section aims: this section identifies key recurring themes and credit issues for exposures to insurance companies. Signs of distress Recurring themes for insurers getting into distress External environment; internal weaknesses and contagion risk Risks in the insurance business model Balance of business risk and financial risk Threats to likely sources of payback Implications of distress for different stakeholders: policyholder priority, diverging recovery prospects in distressed insurers and holding companies; overview of legal processes for failed insurers Case study: Symptoms and causes of distress. Business Risk Section aims: this section focuses on challenged business models and insurance companies with significant exposure to losses from their operations. The significance of size and age of a firm, good vs. bad growth Business models exposure to higher-risk sectors: variable annuities, D&O, financial and mortgage guaranty; catastrophe reinsurance Investment risk: stress testing write-downs, key asset / liability management (ALM) challenges; asset valuation challenges; effectiveness of hedges, concentration risks; aggregation of exposures across asset and liability classes Underwriting risk: pricing and data challenges; catastrophe and concentration risk Reinsurance risk: credit and dispute risk; over-reliance on reinsurance; gaps in cover Reserve adequacy: legacy exposures and loss reserve triangles in non-life; reserving for embedded guarantees or longevity risk in life Life insurers: short-term and long-term impact of poor policy persistence Longevity and mortality risks Regulatory risk: relative vulnerability of sectors Case study: Insurers with underwriting risk challenges.

6 Management and Shareholders Section aims: this section focuses on management and strategy and risk management challenges in troubled markets. Risky or inappropriate strategies, signs of desperation Advantages and disadvantages of diversification Significance of ownership structure: mutuals, conglomerates etc. The importance of franchise How to recognise weak management and lack of integrity When performance seems too good Disclosure and corporate governance concerns Case study: A combination of investment risk and contagion risk. Financial Risk Section aims: this section focuses on the adequacy and quality of capital, liquidity and financial flexibility. Purpose and required features of capital vs. technical provisions Capital adequacy: reliability of regulatory solvency formulae; ability of capital to withstand underwriting, investment or other shocks Quality of capital tangible vs. intangible net worth; capital with restricted use; mix of debt, equity and hybrid capital Leverage: limits to an insurance company s ability to leverage Double leverage: challenges of a leveraged holding company Importance of financial flexibility Liquidity: potential cash flow shocks; liquidity of investments Case study: Insurers with weak solvency and / or poor quality of capital. Operating Environment Section aims: this section focuses on key macro-economic and sector trends, which are likely to erode creditworthiness. Case study: a major rein-surer over-exposed to adverse investment and underwriting conditions Investment and economic cycles impact of recession, inflation and financial crisis on main sectors Underwriting cycles; trends in catastrophe losses, litigation, mortality / longevity Differing vulnerabilities to adverse scenarios by business line Exercise: vulnerable lines of business in certain adverse scenarios Changes in regulation, tax or accounting Case studies: Insurers who suffered in the Euro-zone crisis.

7 Workshop Timings Below are typical timings for our courses. Participants will be advised upon registration should the timings change. Breakfast: 8:00am Course Starts: 8:30am Course Ends: 4:30pm Lunch: Starts between 12:30pm and 1:30pm, and lasts no longer than 1 hour Short breaks: minutes are taken mid-morning and mid-afternoon Dates/Prices DATES 27th - 29th Oct 2016 DURATION 3 Days LOCATION BIBF PRICE BHD 950/-

8 For further information, and to register. Please contact the Centre of Insurance: Tel: (+973) / info@bibf.com or insurance@bibf.com Leading Excellence in Insurance