Dynamic Financial Analysis Issues in Investment Portfolio Management

This paper discusses issues that arise when using dynamic financial models to assist in the management of a property/casualty insurer's investment portfolio. There are three areas covered in this paper. The first discusses how much detail should be included on the asset side of a dynamic financial model in order to make it useful in making investment decisions. The second section applies a dynamic financial analysis to more accurately determine the optimal after-tax income for an insurer. The third area offers some suggested approaches to summarizing and conveying the results of a dynamic financial model.