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Insurance From Underwriting to Derivatives

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Insurance From Underwriting to Derivatives

Asset Liability Management in Insurance Companies


15 min read
10 take-aways
Audio & text

What's inside?

Investments in European and U.S. insurance are just as safe and predictable as the next earthquake, but there is major money to be made before the ground begins to tremble. Here’s how the pros figure out what’s shaking.

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Editorial Rating



  • Innovative
  • Applicable


In Insurance from Underwriting to Derivaties, Eric Briys and Francois de Varenne, both Deutsche Bank insurance experts, have written a highly technical, albeit readable, book for their professional peers. They discuss property-casualty insurance, risk, securitizing, pricing and liabilities duration in the United States and Europe. However, it will dawn on the casual reader fairly early that there should be an "experts only" label on the book jacket. Even the basic introduction to property-casualty insurance begins with the presentation of complex mathematical models. More daunting models, charts and graphs elucidate information throughout. Insiders will appreciate this data and the extensive footnotes and references. While this may not be a book for the mid-management reader, assures you, without risk, that its target audience - financial executives and professionals in the insurance industry - will be very glad to have it.


Property-Casualty Insurance Basics

Four main developments give the first impression that the property-casualty insurance industry may be in trouble. Premiums are falling, interest rates have dropped, growth prospects are gloomy (though the value of insured risks is up) and the industry may be suffering from excess capital. However, if you view these factors through the prism of pricing, you’ll grasp the situation and understand its primary trend: securitizing risk. How insurance is priced is at the heart of understanding the property-casualty or property-liability industry. Property-casualty insurers analyze their firms’ earnings in two categories:

  • The technical result (or underwriting income) - The balance between the products sold (mostly insurance premiums) and the expenses directly associated with insurance (principally claims and administrative expenses).
  • The financial result - The income generated by investing collected insurance premiums.

The time lag between collecting insurance premiums and settling claims is also critical because of the investment opportunity that resides in the gap between getting paid and paying. However, since...

About the Authors

Eric Briys is a managing director at Deutsche Bank, where he heads the Insurance Strategies Group. He worked previously for Merrill Lynch and Lehman Brothers, and is a former Professor of Finance at HEC Management. He has published seven books on finance and economics and more than thirty scientific articles. Francois de Varenne covers European insurance and reinsurance companies as a vice-president at the Deutsche Bank. He also worked previously for Merrill Lynch and Lehman Brothers. He is the former head of Financial and Economics Affairs at the French Federation of Insurance Companies. He has published three books and more than ten scientific articles.

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