Frequently Asked Questions
Find answers to some of the questions we frequently receive about establishing, acquiring and selling Insurance Companies .
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A captive may be relevant when a company wants greater insight into its own claims, better opportunities for targeted loss prevention and greater control over risk financing. The assessment should therefore cover both the expected financial benefits and the opportunities to strengthen risk management through the systematic use of the company’s own claims data. These benefits should be weighed against establishment and operating costs, capital commitments and the risk retained by the company.
Nordisk Aktuarservice provides analyses of risks, claims data, capital requirements and financial scenarios to support the decision.
A sound basis for decision-making links the company’s finances and risks to the organisation’s strategy and long-term objectives. Management should understand the company’s expected profitability, capital requirements, risk exposure and potential liabilities so that the acquisition can be assessed in this context. Actuarial due diligence can provide insight into matters that are not necessarily apparent directly from the financial statements.
When establishing or acquiring an insurance company, actuarial analyses of risks, expected profitability and capital requirements can support the documentation and dialogue with the supervisory authority.
Nordisk Aktuarservice provides the actuarial basis in collaboration with the company and its other advisers.
In addition to the transaction or establishment itself, the basis for decision-making should cover subsequent operations. Ongoing requirements relating to risk management, reporting, governance and capital require resources and should be included when assessing whether the investment will create value over the long term.
Key risks include provisions being insufficient to cover future insurance liabilities, premium levels failing to support expected profitability, or capital requirements being higher than anticipated. Data quality and assumptions about future developments affect how reliably these matters can be assessed. It is therefore important to understand both the financial statements and the underlying assumptions and uncertainties.
A robust actuarial data foundation can make it easier for potential buyers to assess the company. This includes documentation of premium levels, provisions, capital requirements and key assumptions, as well as a clear description of material uncertainties.
Nordisk Aktuarservice can provide analyses and quality assurance of the actuarial material.
The value typically depends on the company’s future earnings potential considered in conjunction with its profitability, risk profile, capital position and the quality of its insurance portfolio. An actuarial assessment can clarify the relationship between these factors and their impact on the overall valuation.