FINANCIAL DEVELOPMENT MATRIX AND OPTIMIZATION OF FINANCIAL STRATEGY OF INSURANCE COMPANY (ON EN EXAMPLE OF PJSC «SK« EUROINS UKRAINE»)

Abstract

The reliability of the insurance company directly depends on its financial stability, that is, the ability to cover insured cases under insurance contracts of clients. At the same time, the theme of organization, functioning and evaluation of the insurance companies finances is insufficiently developed in comparison with the finances of other industries and there are many factors that can affect it today. One should not be ignored is the strategic aspect of management, which involves planning for the future financial development of insurance companies.

It is known that the finances of the insurance company are specific and can be evaluated based on the financial and insurance aspects of the activity.  The fundamental result of the financial and economic activities of the insurer, which can be used to make strategically important decisions, is the amount of financial and insurance outcomes.

As we believe, the calculation of the integral indicator of insurance companies` development is effective in evaluating of it`s financial development possibilities - FDP (Financial Development Potential), as well as indicators of insurance activities (IB - Insurance Business) and financial valuation (FB - Financial Business) calculation. An integral development indicator is defined as the difference between financial security and current financial needs. The changes in the guarantee fund and available insurance reserves should be taken into account when evaluating the results of financial activities. The guarantee fund includes all additional capital, additional reserves and retained earnings. To understand cash flow dynamics, it is crucial to analyze IB and FB amounts. If any of the indicators (IB, FB) exhibits a negative value, this points the emergence of problems and threats to the financial stability of the insurer, which must be addressed immediately. Based on the calculations, it is feasible to create a financial strategy matrix to determine future trends, interpret the financial strength. Describing the current position of the company (state of equilibrium, state of threat of stability, etc.), we can also predict what square the insurer can get to or which position is desirable.

The indicators of PJSC «SK«Euroins Ukraine» financial strength and estimation of investments value is given in the article.