Importance The coverage of the analysis of net income and net cash flow interrelations based on financial statements of insurance companies is insufficient in the economic literature. Furthermore, the described methodological approaches rest on internal accounting data, which are inaccessible to external users. Objectives The study aims to build methodological approaches to assess the ability of insurance companies to develop and maintain the required level of profitability and solvency. Methods Based on the analysis of works of leading experts on assessment of financial condition of insurance companies, I have developed a technique to study the interrelation of net income and net cash flow of insurance companies subject to the industry specifics and requirements of accounting and insurance legislation. The indirect method of cash flow analysis is a tool to evaluate the efficiency of cash use in large insurance companies of the Russian Federation. Results I offer and test a methodology to analyze the interrelation of net income and net cash flow for insurance companies based on public financial statements data. The method enables to obtain adequate information about the current and future solvency of the insurance company. Conclusions Focusing on such an important aspect as profit and fund management will enable insurance companies to minimize risk of insolvency and meet their obligations to policyholders and counterparties in a timely manner.
Keywords: net, income, cash flow, analysis
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