scholarly journals The Impact of The Reinsurance Institute on The Financial Results of Insurance Companies

2021 ◽  
Vol 13 (3) ◽  
pp. 117-130
Author(s):  
Marina V. Polyakova ◽  
◽  
Konstantin L. Polyakov ◽  
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Cash Flows ◽  
Insurance Companies ◽  
Financial Indicators ◽  
Short Term ◽  
Ex Post ◽  
Insurance Business ◽  
Financial Characteristics ◽  
The Impact

Risk management is one of the biggest challenges for financial market participants, in particular for the insurance companies. To solve this problem, the regulator and the insurance market have created a number of institutions, one of which is the institution of reinsurance. Institutions contribute to the solution of problems arising due to the limited rationality and opportunism of participants of contract processes. By use of these institutions organizations have an opportunity to reduce the “ex post” and “ex ante” transaction costs associated with contracts. At the same time, institutions only determine the rules and goals. The organization’s tactics and the way of fulfilling the requirements are completely controlled by its leadership of all levels, which also defines the role of institutions in solving other important business tasks, such as ensuring its efficiency and sustainability. The sustainability and efficiency of the insurance business significantly depends on proper risk management. This study analyses how the use of reinsurance institution as a part of risk-management affects the financial results of insurance companies. The insured events specified in contracts may not occur during their validity period, and one can suppose that in the short-term perspective reinsurance generates mostly outgoing cash flows, which affect the efficiency, solvency and liquidity of the organization. So the aim of the study is to analyse the impact of reinsurance intensity estimated by the share of premium transferred to the reinsurer on the specific financial characteristics of Russian insurance business. As a result, it was revealed that in the short term the impact is significantly negative: the use of reinsurance leads to decrease in financial performance of domestic insurance organizations. This result, of course, does not diminish the significance of reinsurance for risk-management, but it should be taken into account within financial planning and actuarial activities. For completeness, the relationship of various financial indicators with efficiency, solvency and liquidity of insurance companies was also analysed. In particular, it was shown that a change in the influence strength of a number of financial management tools affect above mentioned characteristics. We also noted the need to consider the nonlinear nature of relationships between financial indicators used in study in processes of forecasting and management.

scholarly journals INFLUENCE OF CASH FLOWS WITHIN A BANK ON ITS LIQUIDITY

2021 ◽  
Author(s):  
Andrey Meshcheryakov
Keyword(s):  
Financial Management ◽  
Balance Sheet ◽  
Cash Flows ◽  
Actual Situation ◽  
Medium Term ◽  
Short Term ◽  
Accounting Data ◽  
Risky Assets ◽  
The Impact

The purpose of the article is to determine an objective approach to the funding of assets from various resources and to assess the impact of cash flows within a bank on its liquidity position. Methods of theoretical generalization and comparison to define an economic substance of the bank asset and liability management, a systematic approach to consider the management of assets and liabilities as interrelated elements of a single system; the method of analysis and synthesis to study liquidity indicators, the method of tabular presentation of data, and the abstract-logical method to substantiate theoretical generalizations and conclusions were used. The issue of maintaining liquidity during the global downturn requires priority attention from the management and analytical service. Central banks of all countries in the world establish, maintain strict control and regulate various indicators of bank liquidity, trying to avoid a banking crisis, since the bankruptcy of one or several banks may lead to destruction of the payment system and cause major problems in the economy. Most modern banks which are focused on long-term activities, when resolving “profitability – liquidity” dilemma, give preference to ensuring a sufficient level of liquidity even in the face of a possible loss of certain income. Despite constant changes and improvements in the liquidity ratio system, modern banks mainly use accounting data for the liquidity ratio calculation disregarding the analysis of the bank’s cash flows which should be carried out in accordance with the basic principles of financial management, the principle of comparing asset-liability maturities and risk levels in particular. Our view is that in analyzing all banking standards and ratios, not only the ratios of various assets and liabilities should be calculated based on the bank’s balance sheet data, but also the sources of formation of certain assets from various resources should be taken into account. In our opinion, it is extremely important to have regard to the situation when the bank’s short-term liabilities (liabilities at call) form its long-term and medium-term requirements. In order to find out an actual situation with the bank’s liquidity position, we should analyze which short-term liabilities were used to form its loan and securities portfolios, as well as other risky and long-term assets. In our opinion, this can be done by making the following adjustments: 1. To reduce the amount of liquid assets by the amount of liabilities at call placed in risky assets. This approach is based on the fact that liabilities at call, which can be withdrawn at any time, are not liquid. In a situation when it is required to make urgent payments, there will be a need for urgent borrowing of additional funds. This may either be difficult to do, or it may be done at an unfavorable interest rate. 2. To increase the amount of short-term liabilities by the amount of that part thereof that was used to form long- and medium-term requirements. This will also reduce the liquidity ratio, but provide the necessary information about its actual level, taking into account the risk formation of the bank’s asset portfolio. An absolute liquidity ratio calculated using the balance sheet data was 63%. When it was adjusted assuming that the bank’s liabilities at call were placed in medium and long-term assets, a decrease by 35% was obtained after reducing the amount of liquid assets, and this figure was decreased by 20% when the amount of short-term liabilities was increased in the calculation. In order to find out an actual situation with the bank’s liquidity position, it is proposed to reduce the amount of liquid assets by the amount of liabilities at call placed in risky assets, or increase the amount of short-term liabilities by the amount of that part thereof that was used to form long- and medium-term requirements.

scholarly journals Financial Performance Analysis of Backdoor Listed Companies

2020 ◽  
Vol 214 ◽  
pp. 02032
Author(s):  
Huang Yuhong
Keyword(s):  
Financial Performance ◽  
Reference Value ◽  
Case Analysis ◽  
Financial Indicators ◽  
Short Term ◽  
Financial Characteristics ◽  
Express Industry ◽  
The Impact ◽  
Strategic Goal ◽  
Backdoor Listing

IPO listing threshold requirements are high, many enterprises have chosen to backdoor listing due to the restrictions of objective factors. In order to study the impact of backdoor listing on corporate financial performance, this paper adopts the method of case analysis and takes SF Express, a typical representative of express delivery industry, as an example to analyze whether SF Express has improved its financial performance after backdoor listing by using financial indicators such as debt paying ability, operating ability, profitability and growth ability. The results show that the overall financial performance of SF Express has been improved due to the sufficient capital and the expansion of business scope. The innovation of this paper lies in the horizontal short-term comparison of financial data of SF Express which is backdoor listed and DEPPON Express which is IPO listed in express industry. The research shows that backdoor listing is more conducive to the improvement of the financial performance of enterprises in the short term, providing certain reference value for enterprises that want to go public by backdoor listing in the express industry in the future. However, when deciding to go public, different enterprises should choose suitable listing schemes according to their own financial characteristics and understand the risk and the strategic goal of the enterprise’s own development.

scholarly journals Mechanisms of Protection from Interest Rate Risk with Reference to the Life Insurance Market in Montenegro

2018 ◽  
Vol 7 (1) ◽  
pp. 17-42
Author(s):  
Milijana Novović Burić ◽  
Vladimir Kašćelan ◽  
Milivoje Radović ◽  
Ana Lalević Filipović
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Life Insurance ◽  
Financial Management ◽  
Financial Stability ◽  
Interest Rate Risk ◽  
Economic Security ◽  
Insurance Market ◽  
Insurance Companies ◽  
Rate Risk

Abstract Insurance companies are facing major challenges that point to the need for control process and risk management. Risk management in insurance has a direct impact on solvency, economic security, and overall financial stability of insurance companies. It is very important for insurance companies to adequately calculate risks to which they are exposed. Asset liability management (ALM), as an integrated approach to financial management, requires simultaneous decision-making about categories and values of assets and liabilities in order to establish the optimum volume and the ratio of assets and liabilities, with the understanding of complexity of the financial market in which financial institutions operate. ALM focuses on a significant number of risks, whereby the emphasis in this paper will be on interest rate risk which indicates potential losses that may reflect in a lower interest margin, a lower value of assets or both, in terms of changes in interest rates. In the above context, the aim of this paper is to show how to protect from interest rate changes and how these changes influence the insurance market in Montenegro, both from the theoretical and the practical point of view. The authors consider this to be an interesting and very important topic, especially because the life insurance market in Montenegro is underdeveloped and subject to fluctuations. Also, taking into account the fact that Montenegro is a country that has been making serious efforts to join the EU, it is expected that insurance companies in Montenegro will strengthen their financial position in the market even using the ALM traditional techniques, which is shown in this paper.

scholarly journals Lalabet Financial Analysis: Study of Islamic Economics at Micro Level

2021 ◽  
Vol 4 (1) ◽  
pp. 233-244
Author(s):  
Ainorrofiqie Ainorrofiqie ◽  
Umrotul Khasanah ◽  
Akhmad Djalaluddin
Keyword(s):  
Financial Management ◽  
Financial Analysis ◽  
Financial Statements ◽  
The Body ◽  
Short Term ◽  
The Family ◽  
Micro Level ◽  
The Impact ◽  
The Village

This research aims to explore the model of financial management tradition Lalabet in the village of Babbalan District Batuan Sumenep. This study is based on the fact that occurred in the community about the implementation of traditions carried out by the heirs to family members who died. Interpretative qualitative research is used and an in-depth understanding of a problem that occurs is emphasized more. Based on the results of this study, the financial management tradition Lalabet can be done based on accounting equations. The accounts contained in the accounting equation is not used in its entirety and are reported as are generally financial statements. In this case, the source of funds in carrying out Lalabet tradition is sourced from personal money, money and donations from the family, money from Muslimat, debt, and money or goods from Lalabet's proceeds. The impact is the onset of debt both short-term and long-term. While the expenditure is in the form of costs in taking care of the body, costs for tahlilan (petto'arean), pa'polo, nyatos, nyataon, nyaebu, mangaji, ngin-tangin, nyalenin mayyid, and ajege makam (kep-sekep).

scholarly journals THE INFLUENCE OF THE CROWN CRISIS ON THE DEVELOPMENT OF INSURANCE BUSINESS IN THE WORLD

2021 ◽  
Author(s):  
Hanna Mamonova
Keyword(s):  
Negative Impact ◽  
Insurance Industry ◽  
Insurance Companies ◽  
Demand For Insurance ◽  
Online Sales ◽  
The World ◽  
Future Challenges ◽  
Declining Demand ◽  
Insurance Business ◽  
The Impact

The article analyzes the impact of the COVID-19 pandemic on the world insurance market and some European countries. Separated economic indicators of the impact of the COVID-19 pandemic on the insurance business of the world are singled out. It was determined that the impact of the COVID-19 pandemic inspired declining incomes of insurers and households, rising unemployment, declining demand for insurance services, a significant decline in productivity of insurance companies, uncertainty about the future development of the insurance industry and the effects of the pandemic. The experience of the world insurers' struggle against the consequences of the COVID-19 pandemic has been studied and generalized. The latest tools that have allowed insurers around the world to mitigate or mitigate the negative impact of the crown crisis, in particular, are: the development of new insurance products; increasing the level of requirements for insurance services in terms of its relevance, price flexibility, mobility and transparency; transition of insurers to online sales of insurance services and online payments for insurance cases; direct funding of specific means of combating COVID-19; use of the latest technologies and innovative methods in the insurance business; introduction of a new mode of staff work in the activities of insurance companies. The transition of insurers to online sales of insurance services and online payments has revealed many unresolved issues regarding the insurer's cybersecurity. Insurers are forced to improve existing technologies and methods of control, to intensify training and information activities. The Crown Crisis has significantly increased the importance of modern underwriting. Therefore, insurers around the world are using the capabilities of artificial intelligence, alternative data sources and better forecasting models. Greater understanding of pandemic processes, gaining experience is needed not only to accelerate the way out of the modern pandemic, but also to form a stable insurance system to the inevitable future challenges. The study of positive experience in the functioning and development of insurance markets around the world in crises and shocks is useful for application in national practice.

scholarly journals The Impact of Internal, External and Enterprise Risk Management on the Performance of Micro, Small and Medium Enterprises

2019 ◽  
Vol 11 (7) ◽  
pp. 2172 ◽  
Author(s):  
Dewi Hanggraeni ◽  
Beata Ślusarczyk ◽  
Liyu Adhi Kasari Sulung ◽  
Athor Subroto
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Business Performance ◽  
Small And Medium Enterprises ◽  
West Sumatra ◽  
Management Factors ◽  
Managing Risk ◽  
Medium Enterprises ◽  
Additional Value ◽  
The Impact

This paper aims to develop the role of internal factors, external factors, and risk management variables on MSMEs’ business performance. This research was conducted in underdeveloped regions of five provinces, which includes 14 cities in Indonesia—East Java, West Sumatra, North Sumatra, West Nusa Tenggara, and East Nusa Tenggara. The Resource-based view and Market-based view methods were chosen to measure 1401 data of MSMEs. The data was collected using offline questionnaires then processed using SPSS. This paper demonstrates a remarkable outcome for MSMEs, showing the significant result of risk management factors that includes risk assessment of marketing and financial management. Other independent variables of internal, external, and risk management factors also show important outcomes on MSMEs performance. This paper offers additional value of the implementation of ERM in MSMEs, which are spread in underdeveloped regions in Indonesia. The findings shown that the activity of the enterprises in identifying and managing risk would bring up the significant effect on operational business performances.

scholarly journals THEORETICAL BASES FOR BANK STRATEGIC RISK MANAGEMENT UNDER THE IMPACT OF MACRO- AND MICROENVIRONMENT

2014 ◽  
Vol 3 (3) ◽  
pp. 325-330
Author(s):  
Veronika Prosalova ◽  
Elena Smolyaninova ◽  
Olesya Smolyaninova
Keyword(s):  
Risk Management ◽  
Strategic Management ◽  
Financial Management ◽  
Financial Risk ◽  
Banking System ◽  
Legal Framework ◽  
Educational Process ◽  
Strategic Risk ◽  
The Impact ◽  
Performance Research

Purpose of research. The purpose of this research is to examine the theoretical bases for banking strategic risks management through examining the impact of micro- and macroenvironment on the credit performance. . Research method. The authors of this research used such methods as: research and analysis of legal framework, study of In this study, the authors have used such methods of scientific research as the study and analysis of the regulatory framework , the study of monographic publications and articles, analysis. Results. The authors propose to specify the notion of strategic management. Thus the principles of strategic management were developed and specific characteristics of commercial banks financial management have been defined. Besides that the notion of financial risk of the credit organization was specified and new approach to commercial banks’ risk management, based on their origin was developed. Implementation of the results. The results can be used for the publications on different aspects of this topic and in the educational process of the education institutions. Theoretical aspects connected to the difficulty of evaluating banking risks and described in the paper, can be of interest in the process of developing practical measures on preventing or minimizing extent of exposure of the banking system to the risks in general. The main concepts of this research can become a base for further scientific and practical research in the field of rationalizing the banking risks management system.

scholarly journals THE IMPACT OF THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ON THE FINANCIAL SITUATION AND PERFORMANCE OF THE COMPANY

2020 ◽  
Author(s):  
Radoslav Tusan ◽  
Keyword(s):  
Financial Reporting ◽  
Insurance Companies ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Financial Indicators ◽  
Financial Situation ◽  
Financial Reporting Standards ◽  
And Performance ◽  
The Impact

This paper deals with the evaluation of the impact of the adoption of International Financial Reporting Standards (IFRS) on the financial situation and performance of the company. The Slovak Accounting Act allows accounting and reporting under IFRS for two types of entities - explicitly specified by law (e.g. banks, insurance companies, stock exchange); and those that meet specified size criteria. The analyzed company met the size criteria and IFRS has been applying since 2018. The transition from Slovak accounting procedures to IFRS has an impact on the classification of individual items of assets and liabilities, their structure, and the classification of related costs and revenues. The transition to IFRS thus has an impact on the company's financial position and performance. The paper set out two objectives of the research: 1) the transition to IFRS caused an insignificant change in the company's financial indicators; 2) the transition to IFRS caused a significant change in the company's financial indicators. The results of the analysis show changes in the structure of the company's assets and liabilities, the amount of income and expenses, and the less significant impact of the adoption of IFRS on financial indicators.

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