Effectiveness of the current activity

The estimation of the effectiveness of the current activity of company passes before two directions. First, undergoes analysis the effectiveness of insurance operations, in the second place, the total effectiveness of the activity of company, including influence beyond the state of the company of her investment and other incomes and expenditures. In the analysis run of insurance operations primary attention is paid to the following factors:

• Coefficient of insurance payments as a whole on the company and with the laying out on the basic branches.
• Coefficient of discharge (relation of the sum of expenditures for business, besides the insurance payments to the sum of the obtained rewards).
• Combined coefficient (sum of two above-mentioned coefficients) as a whole on the company and with the laying out on the basic branches.
• Operating coefficient (combined coefficient with the correction for the investment income, defined as percent portion besides the clean sum of the obtained profit).
• Action of the utilized as far as a company methods of redundancy and bookkeeping calculation beyond the current indices.

The analysis of the coefficients of insurance payments and consumption and combined coefficient gives the first idea about the stability of the incomes of company. Nevertheless, the agency “Of standard & Of poor's” recognizes that existence of different approaches to the forming of client base with different needs of redundancy down the payment of insurance compensation (characterizing by, for example, the duration of the period of redundancy) often makes the surface analysis of the combined coefficients for the sake of senseless occupation. The comparison of the operating coefficients, which reflect relatively the higher role of incomes from the investments before the long-term briefcases, gives the possibility to obtain more comparable data for the analysis. In addition to this, the agency “Of standard & Of poor's” realizes that the rules of bookkeeping calculation and redundancy utilized in the different countries can give the distorted picture of the real state of the affairs of company, the amortization of reserves especially in cases when is allowed, and the appropriate corrections are introduced.

The analysis of the total effectiveness of the activity of company includes the study of the following factors:

• Income analysis with the laying out across the separate subdivisions of company, the branches, the insurance products and the services, the channels of realization.
• Stability/the changeability of income level.
• Share of profit before the gross gain (before and after the payment of taxes).
• Profitableness of active memberships (before and after the payment of taxes).
• Degree of the influence of the rules of the redundancy/of bookkeeping calculation beyond the current indices.

The agency “Of standard & Of poor's” uses an index of share of profit before the gross gain as the base index of the estimation of the general profitability of the insurance activity of companies, which do not carry out life insurance. On the whole this index makes it possible to be abstracted from the action of the nomenclature of insurance products and services (i.e., from the influence of long-term and short term factors) beyond the effectiveness of insurance activity, since it considers income in investment. Furthermore, share of profit before the gross gain reflects the influence beyond the profitableness, of other not connected for the sake of the insurance factors, such as brokerages, expenditures on the maintenance of credits and other expenditures or the incomes, [otnosimye] for gain. This index usually does not include the realized capital gains, since, in the opinion the experts of the agency “Of standard & Of poor's”, for many companies this article of income bears nonsystemic nature, being the function of general economic climate and level of the interest rates. Nevertheless, if company consecutively carries out strategy of the realization of capital gains within the framework of more general common investment and business strategy, the agency “Of standard & Of poor's” introduces beside its calculations the appropriate corrections.

The index of the profitableness of the active memberships, calculated by the agency “Of standard & Of poor's”, includes the clean realized capital gains, since this makes it possible to obtain a maximally precise idea about the total effectiveness of the financial activity of insurer. Although many organizations use as the base index profitableness of their own capital, the agency “Standard & Of poor's” does not, as a rule, examine it for purposes of the estimation of the effectiveness of basic economic activity, since it is found before the dependence beyond the structure of capital of company in cases when it actively are used the drawn resources, what it does not occur in the case of using the indices of share of profit before the gross gain and the profitableness of active memberships.

Enormous role plays the quality of incomes. , other conditions being equal, the companies, the sources of income of which are diversified and before state to the, therefore, ensure the large stability of the entering of incomes, are considered as the stronger than the companies, sources arrived which more they were concentrated: in the case of the unexpected “shock” the overall level of the profitableness of the first will not suffer in contrast to the second, for which the successful functioning of one-two prevailing products is matter of life or death. The agency “Standard & Of poor's” also allows the influence of normative medium and tax legislation of different countries beyond the state of the real and current indices of profitability. For example, the rating of company can be increased, if in the country, before which it acts, there is a strong normative base, which supports the advantageous for the insurance companies practice of price formation before the branch and the, therefore, ensuring high profitability of insurance activity. A maximally individual approach to the amortization of active memberships on the basis of account about the incomes, where is used, the agency “Of standard & Of poor's” introduces the specific corrections beside the calculation of rating, which makes it possible to more fully reflect the real picture of the effectiveness of insurance activity taking into account questions of the calculation of investments.

The practice of the redundancy and the rules of bookkeeping calculation also can show essential action beyond the current indices of profitableness, and the agency “Of standard & Of poor's” undertakes the attempts to establish real state of affairs, reading between the lines of official reports. , where this, possible legislatively established deductions at the point of the equalizing reserve and the reserve for coating of losses from the natural calamities are read from the current indices and they are considered as a direct change in the size of its own capital. Thus the agency “Of standard & Of poor's” withdraws the unrealized capital gains and capital losses from the calculation of balance profit and is considered data of article as a direct change in its own capital. In the cases of the insurance companies, whose reserves are especially strong or weak, the corresponding sums are considered with the calculation of real profitability in the analysis run of current indices.