Prime has provided financial modeling and Dynamic Financial Analysis (DFA) to the insurance industry since the early 1990s. Our DYCARR® model provides a sensible approach for insurers who want to balance the liquidity of shorter maturity bonds with the higher yields of longer maturity bonds. Our models improve communication with our clients by ensuring that our portfolio management strategy aligns with company budgets and projections. The end result of a DFA model is an actionable investment portfolio plan that balances risk and return for the entire insurance enterprise.

Our models include both long term annual projections and short term quarterly projections. The models utilize both scenario testing and stochastic simulation to provide balance sheets, income statements, cash flow statements, and tax output. Under scenario testing we determine the most relevant scenarios for clients and evaluate them individually. Stochastic simulation evaluates thousands of scenarios that vary key inputs.

Important variables in our dynamic financial models include:

  • Interest rates

  • Equity market volatility

  • The underwriting cycle

  • Changes in premium rates and exposures

  • Uncertainty in the timing and amount of liabilities

  • Catastrophe potential

Our 20+ years of DFA expertise finds the right balance of complexity and simplicity for the needs of each of our clients. The ultimate goal of the modeling tools is to improve income and total return in each of our company’s investment portfolio while managing risk to the appropriate levels.