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Expertise > Financial
Advisory > Mergers and Acquisitions
Mergers and Acquisitions
Insurance M&A transactions
bristle with technical difficulties.
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What are the special features of life
and health insurance company M&A work?
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Life insurance is a consumer
products business. Consumers buy life policies and annuities
as part of a long term financial plan. Long term financial
commitments imply long term shareholder value creation. To
gauge this, you need long term profit projections. Such
projections cannot be made absent special knowledge of the
profitability of insurance portfolios.
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What are the difficulties in
analyzing any insurance company?
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The calculation of insurance company liabilities are based on
a range of assumptions. Lotter Actuarial Partners prides
itself on providing highly critical and skeptical reviews into
the methodologies and techniques used by companies to
determine their liabilities. Furthermore, we help
investors analyze the implications of
- Exposures to problem risks
- Finite or financial reinsurance
- Changes in underlying assumptions as they affect the
value of an entity.
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How does an Investment Banker determine
the value of an insurance company?
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Investment
Bankers use an actuarial appraisal as a starting point for
M&A value determination. Actuarial appraisal values
are principally made up out of three components:
(1)
realistic value of capital and surplus;
(2)
present value of existing portfolios of business; and
(3)
present value of new business production plant. Lotter Actuarial
helps investment bankers to determine these present values.
See
examples of our M&A embedded value reporting at "Outsider
Appraisals"
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