1. Automated Financial Analysis Solvency Tools
David A. Vacca, CPA
Assistant Director
Insurance Analysis & Information Services Department
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

2. Presentation Overview
Overview of Financial Analysis Solvency Tools
Databases Serving Other Purposes
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

3. Confidential - Regulator Only
NAIC Databases
Financial Data Repository (FDR)
Exam Tracking System (Financial and Market)
Complaints
Special Activities
Producer database
Change of Control (Form A)
Regulator Actions
Valuation of Securities
Confidential - Regulator Only

4. Financial Analysis Solvency Tools
Collection of automated solvency tools designed to provide an integrated approach to screening and analyzing the financial condition of insurers
Financial Analysis Solvency Tools (FAST)
Navigation Tools
Notification Tools
Analytical Tools
Prioritization Tools
Adhoc Reporting
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

5. Tools and Resources NAIC I-SITE & StateNet Prioritization Tools
Analytical
Tools
Summary
Reports
Databases

6. Navigation Tools
For Regulators Only

7. Number of Insurers Filing to the NAIC
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved 7

9. Confidential - Regulator Only
Electronic Filing - PDFs
Confidential - Regulator Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

10. Confidential - Regulator Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

11. Confidential - Regulator Only
Pick-A-Page
Selection and print capabilities of any financial or demographic information that comes from the annual/quarterly statements filed by insurance companies with the NAIC
Confidential - Regulator Only

12. Confidential - Regulator Only
Pick-A-Page
Confidential - Regulator Only

13. Confidential - Regulator Only

14. Confidential - Regulator Only
Line Reports
Allow users to compare one line from the annual statement with a group of companies matching the selected criteria (w/ statement type)
Confidential - Regulator Only

15. Line Report Example

16. Line Report Example

17. Confidential - Regulator Only
Company Demographics
Confidential - Regulator Only

18. Confidential - Regulator Only

19. Preferences

20. Confidential - Regulator Only
Validation Exceptions
Confidential - Regulator Only

21. Confidential - Regulator Only

22. MyNAIC Portal

23. Confidential - Regulator Only
Notification Tools
Confidential - Regulator Only

24. Personalized Information Capture System (PICS)
Push technology
Create profile
Specify criteria
s generated when data changes for companies/individuals that fit into the criteria specified
Confidential - Regulator Only

25. Confidential - Regulator Only
Notification Tools
Confidential - Regulator Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

26. Confidential - Regulator Only
PICS notifications go directly to your mail inbox
Confidential - Regulator Only

27. Confidential - Regulator Only

28. Analytical Tools
For Regulators Only

29. NAIC Financial Analysis Handbook
Provides a uniform means for insurance departments to more diligently identify companies experiencing financial problems or that pose the greatest potential for developing financial problems
Provides guidance for the insurance departments to define and evaluate particular areas of concern in troubled companies
Updated annually
Confidential – Regulator Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

30. FAH

31. FAH

32. Financial Analysis Handbook Summary Report
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

33. Financial Profile Reports
The Financial Profile Report is a summary of key financial information for a company over the last five years
Includes a Financial Summary page
There are also detailed sections for: Assets, Liabilities, Capital & Surplus, Loss & LAE Reserve Analysis, Income Statement, Cash Flow and Exhibit of Business and Profitability

34. Trend and Ratio Analysis by Insurer
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

35. Automated Graphs by Insurer
For Regulators Only

36. Profile: Peer Analysis Report
Release for Annual 2007 – Life/Health
Released for Annual 2009 – Property/Casualty
Profile defines 10 peer companies based on:
Line of Business
Number of States Writing Business
Geographic considerations
Closest Asset or Premium Size
Profile provides financial data and ratio analysis for 10 peer companies

37. P&C Peer Analysis Profile
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

38. Loss Reserve Projection
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

39. Exam Jumpstart
Analyzes the investment schedules data as compared to SVO VOS database or NRSRO feeds and provides summary of potential errors
CUSIPs
Rates
Designations / market value
Assumed and Ceded Reinsurance

40. Percentage of Valuation Discrepancies Analysis

41. Prioritization Tools
For Regulators Only

42. IRIS Ratio 13 ratios for Property/Casualty Overall Profitability
Liquidity
Reserve
12 ratios for Life and Health
11 ratios for Fraternal
Asterisks highlight ratios outside usual range

43. IRIS Ratios Ratio Analysis
Evaluate the ratio results by analyzing each component of the calculation
Understand the industry average in relation to the company’s result
Understand the company’s historical results and put them in context

44. IRIS Ratios (P&C) Gross Prem. Written/Surplus
Net Prem. Written/Surplus
Chg. in Net Writings
Surplus Aid/Surplus
Two-Year Overall Operating Ratio
Investment Yield
Gross Chg. in Surplus
Net Chg. in Surplus
Liabilities to Liquid Assets
Gross Agents’ Balances/Surplus
One-Year Reserve Development/Surplus
Two-Year Reserve Development/Surplus
Estimated Current Reserve Deficiency/Surplus

45. IRIS Ratios (L&H) Net Change in C&S Gross Change in C&S
Net Income to Total Income
Adequacy of Investment Income
Non-Admitted to Admitted Assets
Total Real Estate & Mortgages to Cash & Invested Assets
Total Affiliated Investments to C&S
Surplus Relief
Change in Premiums
Change in Product Mix
Change in Asset Risk
Change in Reserving Ratio

46. IRIS Ratios For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

47. Prioritizations Tools - IRIS (Only public tool)
Confidential – Regulator Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

48. Analyst Team System (ATS)
Available for P&C, Life, Health and Fraternal
Automated review system that uses statistical analysis, FAST Scores, RBC to assign review levels
Level A – High level of concern
Level B – Requires attention
No level required
Confirmed by team of State financial analysts and examiners
ATS Reports
Analyst Team Comments and Summary of Criteria

50. Adhoc Summary Tools
For Regulators Only

51. Timely Industry Data

52. Market Share Data

53. Example of Lead State Report

54. Summary Reports Aggregate Line of Business by State
For Regulators Only

55. 2010 Foreign Exposures Bonds Common Stock Preferred Stock Total Canada
107,258,924,947
2,797,033,029
102,720,957
110,158,678,933
United Kingdom
75,260,217,980
14,088,268,833
304,893,974
89,653,380,787
Australia
47,217,472,486
968,525,319
1,090,047
48,187,087,852
Japan
44,692,346,938
1,728,086,885
804,703
46,421,238,526
Netherlands
38,799,783,554
738,047,836
162,105,126
39,699,936,516
Cayman Islands
36,240,026,378
387,264,978
1,065,155,396
37,692,446,752
France
22,287,938,985
952,305,774
985,055
23,241,229,814
Luxembourg
19,801,806,241
350,112,961
786,744,995
20,938,664,197
Bermuda
13,224,942,328
6,244,860,443
419,553,675
19,889,356,446
Germany
12,728,799,616
537,539,479
60,627,058
13,326,966,153
Ten Largest
417,512,259,453
28,792,045,537
2,904,680,986
449,208,985,976
Pct of Total Foreign
78.3%
76.5%
93.3%
78.2%

56. Exposure to Portugal, Italy, Ireland, Greece and Spain
Bonds
Common Stock
Preferred Stock
Total
Portugal
820,986,517
10,128,159
831,114,676
Italy
2,299,649,997
127,709,987
2,427,359,984
Ireland
9,483,497,840
1,198,190,566
24,872,118
10,706,560,524
Greece
1,160,356,800
7,220,451
142,000
1, ,251
Spain
6.371,857,588
200,008,446
88,145,795
6,660,011,829
20,136,348,742
1,543,257,609
113,159,913
21,792,766,264

57. Databases Serving Other Purposes
For Regulators Only

58. Consumer Information Source - CIS
Consumer Information Source (CIS) provides information about insurance companies to the general public.
Anyone can access key information about insurance companies, by entering the company name and state.
Information provided:
Closed insurance complaints
Licensing information
Key financial data
Available via a link from the NAIC home page!
                                             
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

59. CIS – Financial Profile
Company Demographic Information
Direct Premium Written By Line of Business
Invested Asset Mix
Three-Year Net Premiums Written
Three-Year Policyholders’ Surplus Trend
Three-Year Income/Loss Trend
                                             
For Regulators Only
© 2009 The National Association of Insurance Commissioners All Rights Reserved

60. Questions
Please contact David Vacca at or for questions
For Regulators Only