Management Strategies and Dynamic Financial Analysis

Dynamic financial analysis (DFA) has become an important tool in analyzing thefinancial situation of insurance companies. Constant development and documentationof DFA tools has occurred during the last years. However, several questionsconcerning the implementation of DFA systems have not been answered in theDFA literature to date. One such important issue is the consideration of managementstrategies in the DFA context. The aim of this paper is to study the effects ofdifferent management strategies on a non-life insurer’s risk and return profile.Therefore, we develop several management strategies and test them numericallywithin a DFA simulation study.