Concept of dynamic financial analysis of actuarial science

Dynamic Financial Analysis is nowadays gaining popularity across insurance sectors, replacing the traditional notions of surplus adequacy with sophisticated models of financial performance. It is being regularly used for reserving, ratemaking, and valuation.

Dynamic Financial Analysis is a perspective, not a statistical tool. It is a manner of viewing the situation, not a specific model or procedure. Dynamic analysis assumes that various external factors may change in the coming years, and the results of analysis may depend on those external factors.

Extracts from “Guide for Foundations of Casualty Actuarial Science (IC-A1)” by Dr. Rakesh Agarwal. Copyright of Sashi Publications, Kolkata and

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