The Application Of Dynamic Financial Analysis Model For The Non-life Insurance Company

As an emerging tool of Asset-Liability Management (ALM) in the field of insurance companies, Dynamic Financial Analysis (DFA) is used in many developed countries widely. It can not only be competent for comprehensive and holistic forecasting task of insurance company's operation and financial status, but also can help national insurance industry build most preliminary and probably the most effective financial risk fore-warming system.Compared to traditional Asset-Liability Management, there are some innovations: First, because of different asset and liability structure in the life and non-life insurance company, this approach aims to non-life insurance companies; Second, DFA is a transparent tool, so it can be run by the users many times with different assumptions and different parameters; Third, DFA model can be used not only from the regulator's viewpoint to monitor the solvency, but also from the board of the company to value the influence of different strategies.Nowadays, DFA has become a growing trend of Asset-Liability Technology and attracts much eyesight. There will be a great promotion to our insurance companies if we use it in China. However there is a virgin soil in our country, because some articles are focus on the meaning and structure of DFA, not focus on the concrete application. The purpose of this paper is to provide a DFA model and discuss the influence to the non-life insurance company when changing the strategy.First, the paper provides the conception and advancement of DFA, through the comparison with traditional static financial analysis and ALM. Then, it introduces the structure of DFA,the methods of Scenario Analysis and Stochastic Simulation,and how to build the DFA model. Last, with Dynamo3 software and Stochastic Simulation method, it values the management of the strategy with numbers and pictures; then change the strategy, and analyze the difference between these strategies. The conclusion of the paper is that DFA model can value the conditions under different strategies, so the managers can choose a more effective one.