2.4 Analysis of the profitability indicators of the insurance company

Profitability shows how much profit the insurer receives from each ruble of insurance payments and links the amount of profit as a source of financial resources with the amount of work performed to form an insurance fund.

To analyze the profitability of insurance activities, it is necessary to calculate the following indicators based on the profit and loss report of the insurance organization.

1) loss ratio

K ub.n = Page(100-112)/(010+080)=(2448760-65865)/(5275+6257583)=0.38

K ub.k = Page(100-112)/(010+080)= (2587789-54025)/(1312+5338695)=0.47

An increase in the indicator indicates an increase in unprofitability and a decrease in the profitability of the insurance company.

2) coefficient of the share of reinsurers

K d.p..n = Line(012+082)/(010+080)=(40+1512688)/(5275+6257583)=0.24

K d.p..k = Line(012+082)/(010+080)=(39+921671)/(1312+5338695)=0.17

A decrease in the indicator indicates a decrease in reinsurance operations.

3) expense ratio

To consumables = Line(050+160)/(010+080)=(569+846237)/ (5275+6257583)=0.13

To consumables = Line(050+160)/(010+080)=(96+476697)/ (1312+5338695)=0.09

The indicator indicates that the share of insurer expenses in insurance income has decreased.

4) coefficient of income level on investments

To u.d.i.n = Page(020+180-(060+190))/(010+080) =(233+341033-

(69+101180))/(5275+6257583)=0,04

To u.d.i.k = Line (020+180-(060+190))/(010+080)

=(97+449846-(71+328035)/ (1312+5338695)=0,02

A decrease in the indicator indicates a decrease in profitability from investment.

5) efficiency ratio of investment activities

K ef.n = Line((180+120)-(060+190))/(120+130)=

=(341033+(-164705))-(69+101180))/(17044827+8292348)= 0,003

To effect =Page((180+120)-(060+190))/(120+130)=

=((449846+70375)-(71+328035))/(16588792+9343224)= 0,01

An increase in the ratio indicates an improvement in investment projects, which indicates an increase in profitability.

6) profitability ratio

To the general =1+ K ud.k – (K ub.k + K ef.k + K eff.k)

to the beginning = 1+0.04-(0.38+0.003+0.13)=0.53

at the end = 1+0.02-(0.547+0.01+0.09)=0.45

The coefficient is greater than 0, which means the company’s activities are profitable

7) return on capital ratio

To the r.k. n = Mon/SK=218361/5783010=0.04

To the r.k. k = Mon/Sk=134333/8958757=0.01

The dynamics show that return on equity decreased during the reporting period.

8) profitability ratio of insurance activities

K r.s.d.n = Mon/RVD=218361/(-846237-569)= - 0.26

K r.s.d.k = Mon/RVD = 134333/(-476697-96)= - 0.28

The change in the indicator indicates that the company’s performance increased during the reporting period.

2.5 Analysis of the business activity of the insurance company

The stability of the company's financial position is mainly due to business activity. When assessing the dynamics of the main indicators, it is necessary to compare the rate of their change. The most optimal is the following ratio:

T Pn > T R > T A >100%,

0,6 >0,85>1,06

where T Pn > T R > T A – the rate of change, respectively, of profit before tax, sales volume, and amount of assets.

In this case, we see that the ratio is not optimal, since profits have decreased.

Let's calculate and analyze the coefficients characterizing the business activity of an insurance organization:

1) asset turnover ratio:

K oa.n =PSP/A=Str.(10+80)/assets=(5275+6257583)/26114083=0.24

K oa.k =PSP/A=Str.(10+80)/assets=(1312+5338695)/27601114=0.19

where PSP - insurance premiums - net reinsurance.

A decrease in the indicator indicates a deterioration in the efficiency of asset turnover.

2) equity turnover ratio

K sk.n =PSP/SK=Str.(10+80)/SK==(5275+6257583)/5783010=1.08

K sk.k =PSP/SK=Str.(10+80)/SK=(1312+5338695)/8958757=0.6

A decrease in the indicator indicates a decrease in the efficiency of equity capital turnover.

3). turnover of invested assets

K i.n =DI/(I+FV)=str.(20+180)/str.b.(120+130)

=(233+341033)/ (17044827+8292348)=0,01

K ia.k =DI/(I+FV)= line(20+180)/str.b.(120+130)

= (97+449846)/ (16588792+9343224)=0,02

where DI is investment income,

And – investments,

FV - financial investments.

The turnover of invested assets increases dynamically, and business activity increases accordingly.

The financial condition of an enterprise cannot be expressed by any one indicator. It is characterized by a number of indicators, each of which reflects only a specific aspect of financial activity, and a complete judgment about this can only be obtained by assessing the entire set of particular indicators.

The analyst has at his disposal a variety of specialized tools based on specific financial statements or their components. The purpose of analyzing financial statements is to determine the financial viability of an enterprise and its financial results, as well as to identify ways to improve business efficiency.

Such specific analysis tools include cash flow analysis, reporting information on fluctuations in gross income, etc. Since it is impossible to solve all problems at once, comprehensive analysis is not a single act, but a complex multi-phase process, a set of research steps in search of the optimal result.

Financial condition analysis covers various types of analysis in order to reliably assess the current financial situation of an economic entity and identify the reasons that caused it, as well as indicate available opportunities and reserves for improving the financial condition.

Analyzing this enterprise, we can talk about many shortcomings in the company's development strategy. A positive note is the increase in free cash flow and equity capital. There is also an increase in financial stability and growth in the reserve potential of the insurance company. On the negative side, it is necessary to note a decrease in profitability and return on investment. Insufficiently effective reinsurance protection and excessive dependence on the reliability of reinsurers indicate an incorrect policy regarding the activities and development of reinsurance.

In general, the company can be considered profitable, has development prospects, and for a given period of time - solvent, which is a key indicator of the enterprise's activity. But we must not forget about the need to correct mistakes in a timely manner.

To increase financial stability, it is necessary to direct part of the profit to increase equity capital.

The acceleration of capital turnover also contributes to a reduction in the need for borrowed capital.

When analyzing the financial condition of the company under study, you should pay attention to the factors characterizing its financial stability and normal financial condition, ensuring the achievement of the goals of the enterprise, and especially carefully check for signs of bankruptcy, which, in particular, are the following points:

1) inability to repay debts on time due to the following reasons:

Recurring operating losses;

Financing from overdue accounts payable;

Long-term financing from short-term funds;

Lack of own working capital;

Low liquidity indicators;

Increasing the ratio of accounts payable to equity;

Deterioration of relations with banks;

2) inability to continue commercial activities;

Due to the loss of key personnel;

Due to a decrease in the level of inventories, etc.;

3) lack of funds to pay salaries to staff;

4) the excess of the liabilities of the enterprises under study over its property

due to the unsatisfactory structure of the balance sheet, i.e. due to a low degree of liquidity, etc.

To reduce the need for a short-term loan you need to:

Increase your own working capital;

Reduce current financial needs.

In turn, to increase your own working capital it is necessary:

Increase equity capital (increasing authorized capital, retained earnings and reserves, increasing profitability through cost control and an aggressive commercial policy);

Introduce long-term borrowing. Long-term loan has

its advantages: interest rates are lower than on a short-term loan, compensation is extended over time.

Accordingly, to reduce current financial needs

necessary:

Reduce accounts receivable. When reducing the duration of deferred payments, however, you must try not to expose yourself to the risk of losing clientele. Accounting for bills of exchange, factoring, and spontaneous financing can be useful here. You need to study your market before deciding to reduce the average deferment length.

If the duration of competitors’ deferrals is shorter, then you can try to shorten yours. When assessing your current deferrals, you should find out what long-term deferrals of payments contribute to: an increase in turnover or an increase in losses? It is also necessary to reduce the proportion of dubious clients by systematically reminding debtors of the upcoming payment deadline. It is useful to find an opportunity to improve the efficiency of interaction between your own commercial and financial services in order to promptly stop sales to customers who are late in payments or do not pay for goods at all;

Increase accounts payable by extending settlement terms.

Also, for the development of the company, it may be necessary to change the strategic line and policy of the enterprise.

Conclusion

In a competitive economic environment, the management of an enterprise, in order to determine the most objective assessment of economic information and use it for timely adoption of management decisions, requires high-quality processing of financial information about the state of the enterprise. Such processing of economic information, which is generated according to accounting and financial reporting data, is carried out based on the use of financial analysis techniques.

Most specialists and entrepreneurs in Russia have not yet learned how to widely use the results of financial analysis. Accounting considers financial reporting to be the purpose of its main work. However, accounting itself is considered a provider of information for analysis, and not an end in itself.

The results of financial analysis can be useful to a wide range of users. At the same time, economic restructuring requires new approaches to assessing its methods. Historically, with the transition to market relations, financial analysis was quickly absorbed theoretically and transformed into an isolated applied discipline. However, the algorithm for its implementation in different versions forms the basis of the working methods of many business entities and government regulatory authorities.

References

1. Bank V.R., Bank S.V., Tarasknina A.V. Financial analysis: textbook. allowance. - M.: Prospekt, 2009.

2. http://www.reglament.net

3. Ermasov S.V., Ermasova N.B. Insurance: textbook, 2008

4. Richard J. Audit and analysis of the economic activity of an enterprise. Moscow: Audit, UNITY, 2007

5. Kolass B. Management of financial activities of an enterprise. Problems, concepts and methods. Moscow: Finance, UNITY, 2007

To build a methodology indicators of the insurer's financial stability We analyzed existing methods and, based on them, developed indicators that meet the above requirements. The information base of this methodology was made up of open reporting of insurance organizations, which they are required to disclose by virtue of current legislation.

Let us highlight eight groups of indicators of the insurer’s financial stability. Each group of indicators included coefficients reflecting the influence of the factor under study on the financial stability of the insurance company.

1. Indicators of general solvency. This group of indicators characterizes the adequacy of capital (equity and insurance reserves) of the insurer to ensure the obligations of the insurance organization.

2. Indicators of adequacy of insurance reserves. The adequacy of insurance reserves means the adequacy of their structure and size to the obligations assumed by the insurer under insurance contracts. The assessment of insurance reserves in this methodology is carried out from the point of view of their sufficiency based on the volume of collected insurance premiums, as well as based on the structure of insurance reserves.

3. Liquidity indicators. Liquidity indicators reflect the financial condition of the insurance company and show the general structure of investments, which should be such that at any time the insurance company has available liquid funds or capital investments that can be easily converted into liquid funds. In other words, the insurance company at any given time must have an amount of funds available to ensure payment to policyholders.

4. Indicators of dependence on the reinsurance market. Transferring part of the risks to reinsurance allows us to solve a number of important problems: the problem of stabilizing the insurer’s performance over a long period in the event of negative results for the entire insurance portfolio throughout the year; the problem of expanding the scale of activity (taking on a large number of risks) and increasing competitiveness; the problem of protecting one's own assets under unfavorable circumstances. However, the insurance organization must evaluate the economic efficiency of this solution. The indicators in this methodology are aimed at identifying the dependence of the insurance company on the reinsurance market in terms of insurance premiums, payments, and reserves.

5. Indicators of investment activity. Investment income is an additional source of income for the insurer, in addition to income from insurance operations.

Not only the income of the insurer, but also its solvency, that is, the ability to pay all its obligations, depends on the efficiency and reliability of the placement of temporarily free funds. In this regard, the placement of insurance reserves is under strict control by the state.

In this methodology, indicators of the insurer's investment activity evaluate the investment income received by the insurance company in the reporting period in comparison with the refinancing rate, and also evaluate the effectiveness of the insurer's investment activity.

6. Indicators of financial and economic activity. The group of general indicators of the insurer’s financial condition under consideration characterizes the macroeconomic situation and includes the main quantitative characteristics of the insurance company’s activities: the share of management expenses in the company’s investment income, in insurance premiums, the ratio of net profit and investment income of the company.

7. Indicators of profitability and achieved results. The overall performance of an insurance company is characterized by indicators of profitability and achieved results. The activities of an insurance company are assessed based on an analysis of its financial results. To assess the profitability of an insurance company, net profit is compared with the amount of the insurer's own funds, as well as with the amount of insurance reserves.

8. Business activity indicators. Business activity ratios allow you to analyze how efficiently a company uses its funds.

The business activity of an enterprise in the financial aspect is manifested primarily in the speed of turnover of its funds. Analysis of business activity consists of studying the levels and dynamics of various financial ratios of turnover and profitability, which are relative indicators of the financial performance of an enterprise.

Below are the coefficients and their recommended values, on the basis of which it is proposed to evaluate financial condition of the insurer. Recommended values ​​of indicators are developed on the basis of judgments about the value of these indicators by analysts of modern insurance business, as well as on the basis of the requirements of legislation regulating insurance activities.

Indicators describing the developed methodology for determining the financial stability of an insurance organization

General solvency indicators

The level of coverage of the insurance premium with own funds and insurance reserves, the recommended value of the indicator is not lower than 150%
K1 = (Equity + insurance reserves) / (net premium for risk types of insurance) * 100%

Share of equity and insurance reserves in the company’s assets
K2 = (Equity + insurance reserves) / total assets * 100%
The standard is not lower than 80%.

The share of own funds in the company’s obligations not related to insurance contracts, the recommended coefficient value is not lower than 100%
K3 = Own funds / non-insurance liabilities * 100%

Level of coverage of insurance reserves with own funds
K4 = Own funds / technical insurance reserves-net * 100%
The standard is not lower than 50%.

The level of sufficiency of the influx of funds in the form of insurance premium receipts to cover current expenses for insurance payments, current costs of running a business, management, operating expenses, excluding expenses related to investment activities
K5 = (Insurance premiums - net reinsurance) / costs of conducting insurance operations * 100%
The standard is more than 700%.

Indicators of adequacy of insurance reserves

Share of insurance premiums in insurance reserves for risky types of insurance
K1 = Insurance reserves / net premium for risk types of insurance * 100%
The standard is no more than 100%.

The level of coverage of the reserve for declared, unresolved losses in cash
K2 = Cash / reserve for declared, unresolved losses * 100%
The standard is no more than 100%.

Level of coverage of the reserve for unearned premiums by accounts receivable (recommended value - less than 100%)
K3 = Accounts receivable for insurance operations, coinsurance / unearned premium reserve) * 100%

Insurer liquidity indicators

Total balance sheet liquidity = current assets / (short-term liabilities + insurance reserves) * 100%, standard - 100-130%
Cash liquidity = (cash + short-term financial investments) / (short-term liabilities + insurance reserves) * 100%, standard - 100
Current liquidity = current assets / short-term liabilities * 100%, standard - 600-900%
Share of accounts payable in assets = accounts payable without insurance liabilities / assets, total * 100%, standard not more than 40%

Indicators of dependence on the reinsurance market

Share of insurance premiums transferred to reinsurance
K1 = Premiums transferred to reinsurance / (total amount of insurance premiums for direct insurance + received to reinsurance) * 100%

Share of insurance payments covered by the reinsurer
K2 = (Amount of insurance payments covered by the reinsurer) / total amount of payments * 100%
Recommended value 5 - 50%

Share of reinsurers in insurance reserves
K3 = Reinsurer's share in insurance reserves / total amount of insurance reserves * 100%
Recommended value 5 - 50%

Investment performance indicators

Profitability of investment activities of an insurance organization
K1 = Investment income / average investment volume for the period * 100%

Share of investment income in the capital and reserves of the insurance company
K2 = Investment income / sum of capital and reserves * 100%

Efficiency of investment activities
K3 = Investment income / average value of insurance reserves for the period * 100%

Return on Equity
K4 = Investment income / (authorized capital + reserve capital) * 100%

The standard value for coefficients K1-4 is a value of at least 1/3 of the refinancing rate for the reporting period

Return on investment of life insurance reserves
K5 = Income from investing the life insurance reserve / average volume of the life insurance reserve for the period * 100%
The standard value is an indicator greater than the rate of return included in the structure of the life insurance tariff.

Indicators of financial and economic activity

The share of management costs in the accrued insurance premium = management costs / accrued insurance premium * 100%, standard - no more than 30%
Profitability of insurance and financial and economic activities = net profit / income from investment and insurance activities * 100%, standard - 1% -15%

Indicators of profitability of achieved results

The insurer's profitability per unit of own funds = net profit / average value of own funds for the period * 100%, standard - not less than 5%
Share of net profit in insurance reserves = net profit / average value of insurance reserves for the period * 100%, standard - at least 5%

Indicators of business activity of an insurance organization

Change in assets for the reporting period = (assets at the end of the year - assets at the beginning of the year) / assets at the beginning of the year * 100%, standard - 5-30%
Change in the volume of insurance premium collection for the reporting period = (insurance premiums for the reporting period - insurance premiums for the previous period) / insurance premiums for the previous period * 100%, standard - 5-50%
Change in the size of insurance reserves for the reporting period = (insurance reserves at the end of the year - insurance reserves at the beginning of the year) / insurance reserves at the beginning of the year * 100%, standard - 5-30%

After developing the indicators, we tested this methodology on 15 companies that were among the largest companies in 2007 according to the RBC rating, and also made our reports publicly available on the Internet. We ranked the companies under study depending on their place in the RBC rating and assigned the companies positions from 1st to 15th.

Having analyzed the best companies in Russia, we came to the conclusion that 100% of the companies under study have an equity adequacy ratio below the norm, which indicates that, as part of the assets of an insurance organization, equity and insurance reserves are insufficient to cover all obligations assumed insurance organization.

In 86.67% of companies, the indicator of adequacy of insurance reserves for types other than life insurance is less than the recommended value, thus, insurance reserves are formed in a smaller volume than the volume of insurance premium collected by the insurance organization without taking into account premiums transferred to reinsurance.

The cash liquidity ratio is below the norm for 80% of insurers, as a result of which the balance sheet of these insurance organizations is illiquid. Business activity indicators, reflecting the overall business dynamics of 80% of insurers, also turned out to be unsatisfactory. In most cases, this result was achieved due to a decrease in the balance sheet currency at the end of the year compared to the beginning of the year. The obtained values ​​of the coefficients describing the financial condition of insurance organizations indicate the existence of serious problems in the insurance sector of the Russian economy.

According to the results of testing the methodology, the most financially stable companies were the company that took 1st place in the rating and the company that took 9th place in the rating. The most financially unstable company among those selected was the company that ranks 10th in the ranking. Based on the results obtained, we can conclude that a company’s place in most ratings does not give the right to judge its financial stability and reliability.

In our opinion, the scientific development of adequate and reliable indicators of the state of the insurance market can increase the confidence of policyholders and, as a result, activate the role of consumers in insurance relations.

During the analysis, it is necessary to establish the dependence of the reliability of the insurance company on the effectiveness of its activities. It is advisable to carry out this analysis in order to identify the main factors of changes in the amount of equity capital.

The most general characteristic of the effectiveness of the financial and economic activities of an insurance company is profit. In this regard, the analysis solves the following problems:

• - determine the adequacy of the results achieved to ensure the financial stability of the organization and competitiveness;
• - study the impact of various factors on profit;
• - consider the main directions for further improving performance.

The set of economic indicators characterizing the performance of an organization is determined by the depth of the analysis. Based on reporting data, you can analyze profit, profitability and turnover.

During the analysis of profit (economic effect), one can consider profit from the sale of services, balance sheet profit, and net profit.

The business activity of an insurance organization is manifested in dynamic development and effective use of economic potential. To analyze business activity, turnover indicators are used to assess the financial position of the organization. Turnover indicators include the turnover of funds or their sources:

Insurance premiums - net // Average value of funds or their sources for the period.

Business activity analysis includes the following indicators:

Total asset turnover ratio:

Insurance premium for the period / Average assets.

The total turnover ratio reflects the turnover rate of the entire capital of an insurance organization or the efficiency of using all available resources, regardless of their sources. The total turnover ratio reflects the turnover rate of the entire capital of an insurance organization or the efficiency of using all available resources, regardless of their sources;

Working capital turnover:

Insurance premiums - net // Average working capital; equity capital turnover:

Insurance premiums - net // Average amount of own funds.

The equity turnover ratio characterizes the rate of equity turnover and cash activity.

The equity capital turnover ratio is the ratio of the insurance premium for the period to the average equity capital. The rate of return on equity capital reflects the activity of using funds, shows the number of turnover of the company's equity capital, or how many rubles of revenue are per ruble of invested equity capital. The low value of this indicator indicates the inactivity of part of one’s own funds;

Indicators of business activity characterize the return on the economic potential of the company by volume of activity by determining the rate of turnover of the company's total capital and equity capital.

The average value of assets for calculating business activity ratios on the balance sheet is determined using the arithmetic average formula

where An, Ak are, respectively, the value of assets at the beginning and end of the analyzed period.

The profitability (unprofitability) of the activities of an insurance organization is analyzed using profitability indicators. Analysis of the profitability of various areas of activity of an insurance organization makes it possible to determine their impact on the overall financial result of insurance and investment activities.

Profitability indicators (economic efficiency) include indicators characterizing various aspects of the organization's activities.

Based on the data in the financial results report, the dynamics of the return on assets of the organization's insurance activities, as well as the return on total capital and equity, are calculated and analyzed. At this stage, the company’s performance indicators are analyzed, reflecting the ratio of the result of the activity (profit, loss) to the costs incurred or to the company’s turnover. Profitability analysis may include the following indicators:

Net profitability = Net profit / / Insurance premium for the period.

This profitability indicator is influenced by factors that form the net profit of the reporting period and the amount of the insurance premium;

Profitability of activities:

Net profit / Insurance premiums - net.

The indicator shows how much net profit is generated for each ruble of contributions collected;

Return on assets:

Net profit / Average annual value of assets.

The level of return on assets reflects the efficiency of resource allocation and management. The indicator serves as an indicator of the organization's ability to use assets;

Return on equity:

Net profit/Equity.

Using this indicator, the income attributable to equity capital is determined;

Profitability of funds or their sources:

Profit / Average amount of funds or their sources for the period;

Profitability of insurance activities:

Technical result from insurance activities / / Insurance premium for the period.

The technical result is defined as the difference between income and expenses related to the type of activity in question.

The profitability indicator reflects the efficiency of insurance activities in relation to turnover. Profitability from insurance activities reflects the share of profit in each ruble of revenue from the sale of insurance services;

Profitability of insurance activities taking into account investment income:

Technical result from insurance and investment activities / Insurance premium for the period.

This indicator reflects the efficiency of the turnover of insurance activities, taking into account the results from the company’s investment activities. If the insurance organization is operating effectively, the indicator should have a positive value;

Return on assets:

Net profit / Average assets.

This indicator reflects the efficiency of using the company’s total capital (equity and debt),

Return on equity reflects efficiency in relation to the company's investments and capitalized funds. The return on equity indicator establishes the relationship between the amount of invested own resources and the amount of profit received from their use.

When analyzing profitability, it is necessary to calculate the profitability of the insurance organization, return on capital.

1. The profitability of an insurance organization is the ratio of the annual amount of profit to the annual amount of payments.

Let's analyze the main coefficients characterizing the profitability of an insurance organization, such coefficients include:

loss ratio, which is calculated by the formula

where ОУ - paid losses, thousand rubles;

DOU - the share of reinsurers in paid losses, thousand rubles;

This ratio reflects the share of paid losses in insurance income and an increase in this ratio indicates an increase in the unprofitability of the insurance company and a decrease in profitability;

· coefficient of the share of reinsurers, which is calculated by the formula

where PP - premiums subject to transfer to reinsurance, thousand rubles;

PSP - received insurance premiums, commissions and bonuses, thousand rubles.

This ratio reflects the share of reinsurance in the company's insurance operations. An increase in this indicator indicates an increase in reinsurance operations in the company and represents a fee for risk;

· expense ratio, which is calculated using the formula

where RVD is the cost of conducting a case, thousand rubles;

PSP - received insurance premiums, commissions and bonuses, thousand rubles.

This ratio reflects the share of the insurer’s expenses in insurance income, and an increase in this ratio indicates a decrease in profitability, a decrease in the economic efficiency of investments;

· coefficient of investment income level, which is calculated by the formula

PSP - received insurance premiums, commissions and bonuses, thousand rubles.

This coefficient reflects the level of income of the insurance company from investing temporarily free funds received from insurance activities. An increase in this ratio indicates an increase in the insurance company's profitability from investment, and therefore an increase in the profitability of the insurance company;

· coefficient of efficiency of invested activities, which is calculated by the formula

where DI is investment income, thousand rubles;

RI - investment expenses, thousand rubles;

IFV - investments and financial investments, thousand rubles.

This ratio reflects the share of income received from invested funds, and an increase in this ratio indicates an increase in the efficiency of investment projects and an increase in profitability;

generalizing coefficient of profitability of an insurance organization, which is calculated according to the formula

This coefficient reflects the results of the insurance and investment activities of the insurance company and its value should be K 12 >0;

2. Return on equity is calculated using the formula

SK - the company's equity capital, thousand rubles.

This indicator characterizes the efficiency of the use of capital by the insurance company;

3. The profitability of insurance activities is calculated using the formula

where Pb is balance sheet profit, thousand rubles;

RVD - expenses for conducting a case, thousand rubles.

This coefficient characterizes the efficiency of the insurance company.

For ease of analysis, we will combine all the calculations made into a table.

Table 9

Analysis of financial ratios of an insurance company

Coefficient	At the beginning of the period	At the end of the period	Change

We conclude that the loss ratio is negative at the end of the year and amounts to 0.51. An increase in the ratio indicates an increase in the unprofitability of the insurance company and a decrease in profitability.

The reinsurer share ratio is -0.25 at the end of the year. An increase in this indicator indicates an increase in reinsurance operations in the company and represents a fee for risk.

The expense ratio is also negative at the end of the year and was observed at -0.17. An increase in the ratio indicates a decrease in profitability, a decrease in the economic efficiency of investments.

The income level coefficient for investment activities is 0.1. An increase in this ratio indicates an increase in the insurance company's profitability from investment, and therefore an increase in the profitability of the insurance company.

The efficiency ratio of investment activities increased by 0.08 compared to the beginning of the year and amounted to 0.15. An increase in the coefficient indicates an increase in the efficiency of investment projects and an increase in profitability.

The general return on equity ratio increased by 0.12 and amounted to 0.18 at the end of the year. The coefficient must be greater than 0.

The insurance organization's return on capital increased and at the end of the year amounted to 0.32. Return on equity also increased and amounted to 0.18. This indicates the efficient use of the organization's capital.

Due to the financial rehabilitation of the insurance company during the reporting year, profitability indicators are improving. This indicates the efficient use of the company's capital.

Insurers are one of the most profitable Russian companies. Experts from the Analytical Credit Rating Agency (ACRA) came to this conclusion. As noted in the agency's study, the return on equity (ROE) of insurance organizations before taxes in 2016 and 2015 was 24 and 28%, respectively. For comparison: in the banking segment during these periods this figure reached 14 and 3%, and in the economy on average - 13 and 11%.

Although the return on capital of insurance organizations turned out to be lower than what it was a year ago, the return on capital remains quite high, fueling investor interest in the market, ACRA writes.

Insurance companies benefit from the Central Bank's moderately tight monetary policy. The high profitability of the sector is supported by growth in new insurance segments and high real interest rates, which make it possible to generate income from the placement of funds. Net losses in the non-life segment (types of insurance other than life insurance) decreased from 61% (in 2014-2015) to 53% last year, the study notes.

However, from the point of view of insurance companies, the situation looks completely different.

It must be admitted that insurers have had two successful years from an investment point of view, in particular due to the fact that the loss-making rate of motor insurance has decreased against the backdrop of rising tariffs and income from life insurance has increased, admits the managing director of the National Rating Agency, executive director of the Institute insurance".

“However, this does not mean that the situation in the industry is stable, there is no queue of investors wanting to buy insurance companies, everyone understands that risks are accumulating in the sector,” he notes.

In particular, according to the expert, significant profits from the insurance business are mainly received by captive insurance companies affiliated with banks. The remaining players are now faced with an increase in the unprofitability of MTPL.

As the president of the Russian Union of Auto Insurers (RUA) recently stated, significant damage to the MTPL market is caused by the activities of fraudsters who collect considerable sums through the courts.

“In the first half of the year, a negative trend was noted - an unequal ratio between insurance and non-insurance payments in favor of the latter, that is, non-core payments for companies. There are almost 1 billion more of them than those that are made in relation to damaged property. This indicates an entrepreneurial interest in money that went towards payments not to consumers, but to unscrupulous intermediaries and scammers,” noted Yurgens.

In particular, according to RSA, the volume of insurance payments by companies in court in the first half of 2017 amounted to 7.9 billion rubles, and non-insurance payments - 8.7 billion rubles. At the same time, in the first half of 2016, the volume of insurance payments through the court amounted to 5.8 billion rubles, non-insurance payments - 5.6 billion rubles.

ACRA also notes that in the near future, insurers expect a decrease in return on capital due to an increase in unprofitability in compulsory motor insurance. At the same time, the agency believes that a positive impact on the RoE of insurers will help the development of the life insurance sector.

Thus, at the end of 2017, the return on capital will be quite high (about 20%), which will help maintain investor interest in the sector, ACRA believes.

The unprofitability of compulsory motor liability insurance will not have a devastating negative effect on the activities of insurers. Insurance companies “insured themselves” in time and created a large line of products for people who cannot, for example, buy a classic CASCO insurance for 100,000+ rubles, but can buy themselves a franchise that will cost several times less, but will be comfortable for the person, notes Lead Analyst at Amarkets.

According to him, significant growth is observed in the life insurance segment, insurance that is tied to investment decisions. When deposit rates fall, such products become more popular, he adds.

According to the general director of the FinExpertiza company, monetary policy, which aims to target inflation, makes the cost of borrowed resources quite expensive.

In such a situation, a high level of profitability arises in sectors of the economy that have large capital reserves. ACRA data illustrates this trend very well, she believes.

Insurance companies with capital reserves of more than 2 billion show a profitability of 24%. In the banking sector, according to the results of the first quarter of 2017, the top 5 credit institutions by assets have a profitability of 19%, and the Top 20 - 11%.

“If we talk about enterprises in the real sector of the economy, the cost of attracting borrowed resources for them is still high,” the expert states.