Management Strategies and Dynamic Financial Analysis

Dynamic financial analysis (DFA) has become an important tool in analyzing the financial condition of insurance companies. Constant development and documentation of DFA tools has occurred during recent years. However, several questions concerning the implementation of DFA systems have not yet been answered in the DFA literature. One such important issue is the consideration of management strategies in the DFA context. The aim of this paper is to study the effects of different management strategies on a nonlife insurer’s risk and return profile. Therefore, we develop several management strategies and test them numerically within a DFA simulation study.