Twenty Third Floor

Figuring out the future and the now

Category: insurance

Actuarial and Risk, customer value, Embedded Value, insight, insurance, life insurance, measurement, New Business Margin on Revenue

New thoughts on renewal rates for Embedded Values

15 July 2011

David Kirk

Embedded Values (EVs) are widely used to measure value for life insurers. In the context of long-term contracts such as individual life, it reflects the value embedded in prudent regulatory provisions (or “actuarial reserves”). For short-term business (group risk, health insurance, health administration, general insurance etc.) it is something different since these lines don’t have…
Read more: New thoughts on renewal rates for Embedded Values
Actuarial and Risk, Emerging Markets, insurance, life insurance

In Bahrain for a few days

12 July 2011

David Kirk

I’m in Bahrain for a few days kicking off an ERM implementation project. 35 degrees at 7am in Doha on the way there… Bahrain has a population of around 1.2 million but has a well developed insurance sector. Economies of scale limit domestic growth and regional expansion faces tough competition and increased complexity. Will be…
Read more: In Bahrain for a few days
banking, Basel III, insurance, life insurance, Solvency II

The cost of regulation

6 July 2011

David Kirk

Basel II (and the collection of changes called “Basel II” by some), King III, Solvency II / SAM, IFRS changes, Treating Customers Fairly, FICA, Protection of Personal Information, RE exams and of course RICA all cost a small fortune. Â Only the last doesn’t affect financial services companies. Â No wonder the major industry concern is over-regulation.
Read more: The cost of regulation
Actuarial and Risk, creating value, Embedded Value, insight, insurance, life insurance, measurement, New Business Margin on Revenue

New Business Margin on Revenue

28 May 2011

David Kirk

A new measure of life insurance new business profitability is required. What is New Business Margin? Many life insurers currently calculate a measure of the profitability of new business sold over a period called “new business margin”. As defined by the CFO Forum’s MCEV Principles and confirmed in South Africa’s PGN107 covering embedded values, this…
Read more: New Business Margin on Revenue
Actuarial and Risk, Embedded Value, financial risk, insight, insurance, life insurance, measurement

You can’t eat that

23 November 2010

David Kirk

I was in a meeting today with a great company and with great people. We were discussing financial measures for a life insurer, including Embedded Value, when one of the well respected actuaries asks what the Return on Equity is (rather than Return on Embedded Value). Now there are many people who don’t like Embedded…
Read more: You can’t eat that
distribution, economics, insurance, measurement, news, operational risk, optimisation

Eskom – industrial versus retail tariffs

3 June 2010

David Kirk

Moneyweb has an interview with Eskom CFO. For me, the point made about the reasons for differences between retail and industrial tariffs is worth highlighting. This is another example of where common perception is off. (Incidentally, Eskom tariffs are currently 68 cents for residential, 28 cents for big industrial) From the moneyweb interview: PAUL O’FLAHERTY:…
Read more: Eskom – industrial versus retail tariffs
Actuarial and Risk, business tools, creating value, currency risk, financial risk, hedging, insight, insurance, managing uncertainty, operational risk, optimisation

Fourth Floor Tails

14 March 2010

David Kirk

I blogged recently about why I park on the fourth floor of the Cape Town airport parkade, and also about understanding and utilising unlikely but extreme events to your advantage. There is actually a link between these two posts. Parking on the top floor does have a cost. It takes longer to drive up all…
Read more: Fourth Floor Tails
Actuarial and Risk, creating value, economics, financial risk, hedging, insight, insurance, life insurance, managing uncertainty, optimisation

Nasty or nice – playing the tail

13 March 2010

David Kirk

Insurance and gambling have much in common. They both involve uncertainty and money and the rational consumer will, on average, lose money through the interaction. Both business models involve leveraging the tail of probability distributions (one nasty and one nice). The tail of a distribution includes the very bad and very good possible outcomes, that…
Read more: Nasty or nice – playing the tail

About David Kirk

Featured Posts

The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
by David Kirk
Parametric insurance is often marketed as the “clean” alternative to traditional risk transfer. The pitch is compelling: if a hurricane hits a specific GPS coordinate… Read more: The “Indemnity Trap”: Why Outdated Legal Models are Deferring the Promise of Parametric Insurance
The Complexities of Comparing SCR Cover Ratios Across Insurers
by David Kirk
In the insurance industry, we often use Solvency Capital Requirement (SCR) cover ratios as a key metric for comparing insurers’ financial strength. While these ratios… Read more: The Complexities of Comparing SCR Cover Ratios Across Insurers
One answer could be pet insurance
by David Kirk
I firmly believe major demographics shifts are going to have massive social, political, economic, financial market and commercial impacts in the coming decades. The balance… Read more: One answer could be pet insurance
A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
by David Kirk
Every failure hits policyholders’ savings or cover, impact their lives and their livelihoods. They destroys shareholder value and decrease confidence in the entire financial sector.… Read more: A piece of the failure puzzle – decreasing insurer failure rates through Skilled Person Reviews
How and why insurers fail
by David Kirk
I’ve been updating my presentation from 2021 on “How and Why Insurers Fail”. I now estimate the annual failure rate (or at least getting into… Read more: How and why insurers fail
The hidden dangers of opinion shopping and trusting good news.
by David Kirk
I had a recent discussion on the value of getting a second opinion. There’s the old line that “if you want five opinions, ask three… Read more: The hidden dangers of opinion shopping and trusting good news.
40,000
by David Kirk
40,000. That’s the ballpark figure I usually work with as the minimum number of micro insurance policies required for scale. The expenses of running even… Read more: 40,000

Categories