Importance To improve performance and minimize bankruptcy risk, each insurance company should monitor its financial condition on a regular basis. Economic literature describes basic methods of financial analysis of insurance companies. However, it does not sufficiently address such an important aspect as the cash flow analysis of an insurance company. In addition, methodological approaches, which are frequently cited in the economic literature, are based on the use of internal information that is generated in the accounting system and inaccessible to external users. I propose a basic methodology of cash flow analysis of an insurance company. The technique takes into account the amendments to the content of balance sheet, income statement and cash flow statement of an insurer introduced by Order of the Ministry of Finance of the Russian Federation On Financial Statements of Insurers of July 27, 2012 № 109н. Objectives The main purpose of cash flow analysis on the basis of public financial statements is to build methodological approaches to assessing the ability of insurance companies to generate cash flows in the volumes that are sufficient to meet their obligations to policyholders and counterparties; to identify the main sources of income and areas of expenditure; to identify the reasons of cash deficit (or surplus) to monitor liquidity and ongoing solvency of insurance companies by external users. Methods In this paper, based on the analysis of the works of leading experts on assessing the financial condition of insurance companies and personal experience, I have developed a technique to study the efficiency of uses of cash in insurance companies subject to the requirements of accounting and insurance legislation and the industry specifics. Using the direct and indirect analysis of cash flow, I assessed the effectiveness of the use of funds in Ingosstrakh. Results I offer a method of analyzing cash flow for insurance companies based on public financial statements data. The method enables to obtain adequate information about current and future solvency of an insurance company. Conclusions and Relevance I have concluded that in competitive economic environment it is necessary to focus more attention on analyzing and forecasting work results, to enhance the soundness of management decisions. Focusing on such an important aspect as cash management will enable insurance companies to minimize the risk of insolvency and to meet their obligations to policyholders and counterparties.
Keywords: analysis, cash, cash flow, insurance, company, profit, loss
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