FINC323

This course will provide students with a theoretical and practical understanding of the effects of risk on economic value, the purpose and objectives of risk management, and the structure, role, and financial analysis of insurance companies and the insurance industry. The first part of the course will develop the conceptual foundations for understanding the nature of risk, risk management, and insurance decisions to maximize shareholder value. Risk identification, measurement, and reduction through the pooling of risks will draw upon your knowledge of probability and statistics. You should review these topics from your statistics text and notes. The second part of the course will focus on the financial and structural aspects of insurance companies and the insurance industry. Particular emphasis will be placed on the financial analysis of property-casualty insurance companies, especially the importance and application of statutory accounting principles, profitability ratios, asset and liability valuation, income statement-balance sheet dynamics, leverage, and the implication of loss reserving, and pricing strategies. This part will also cover the structure, conduct, performance, and regulation of the insurance sector. The third part of the course will focus on applied topics in risk management and insurance including personal and commercial insurance policies, hedging with derivatives contracts, reinsurance, alternative risk transference, enterprise risk management, and current topics and issues related to corporate and personal liability, automobile insurance and social security. To that extent, students are responsible for any supplemental materials and articles that are handed out in class and/or are placed on electronic reserve.