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Valuation Measuring and managing the value ofpanies - Koller T.

Koller T., Murrin J. Valuation Measuring and managing the value ofpanies - Wiley & sons , 2000. - 508 p.
ISBN 0-471-36190-9
Download (direct link): valuationmeasuringandmanaging2000.pdf
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Net tangible fixed assets 1,230 1,284 1,348 1,388 1,652 2,967 3,274 3,555 3,392 3,527
Intangible assets 570 590 559 511 495 444 402 389 423 423
Deferred policy acquisition costs 1,590 1,724 1,754 1,706 1,929 2,481 1,974 2,138 2,103 2,095
Separate account assets 651 729 867 984 1,367 1,667 2,533 3,528 5,495 9,101
Other assets 7,837 7,333 7,311 8,508 7,527 7,665 8,537 8,024 5,107 7,287
Total assets 29,840 31,784 33,682 32,298 36,051 40,394 47,944 49,875 51,173 58,503
Liabilities and shareholders' equity Total debt 8,000 7,528 7,729 7,573 7,704 9,173 10,338 10,328 6,235 8,198
Accounts payable 1,546 1,774 1,800 1,547 1,352 1,628 1,672 1,899 2,097 2,394
Separate account liabilities 651 729 867 984 1,367 1,667 2,533 3,528 5,495 9,101
Other liabilities 164 101 215 277 11 253 116 60 25 0
Total liabilities 10,362 10,132 10,610 10,381 10,434 12,720 14,660 15,816 13,852 19,693
Provisions and reserves 16,550 18,635 20,046 18,616 22,253 24,738 28,785 29,394 31,725 32,388
Minority interest 0 0 0 0 0 200 200 525 715 715
Preferred shares 225 225 225 425 425 316 315 315 0 0
Common shares 76 76 77 79 76 69 68 66 63 62
Share premium 543 559 585 647 475 97 0 83 0 |
Net unrealized capital gains 42 2 101 84 124 (265) 1,080 784 1,534 1,943
Retained earnings 2,047 2,150 2,036 2,100 2,298 2,557 2,866 2,920 3,331 3,746
Transfers and other movements (4) 5 2 (34) (39 (38) (29) (28) (46) (46)
Total shareholders' equity 2,929 3,017 3,026 3,300 3,363 2,736 4,300 4,141 4,881 5,706
Total liabilities and equity 29,840 31,784 33,682 32,298 36,051 40,394 47,944 49,875 51,173 58,503
V._________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________y
receive payments, called premiums, from their customers in advance of paying benefits. So the timing of an insurer's cash flow is reversed from most industrial companies. Industrial companies invest now to capture cash inflows later. Insurance companies may have net cash inflows in the beginning from premium income (although they must pay commissions to their sales force in the first year), followed by a continuous cash stream through most of the life of the policy. Cash payment obligations are concentrated in the latter part of the life of the policy. This is why insurance companies are heavily regulated—to protect policyholders from the threat of an insurer's insolvency. If the company goes bankrupt, policyholders may lose much of their investment in promised insurance benefits. One reason that insurance companies like to maintain high credit ratings (e.g., AAA or Aa) is that policyholder confidence in the insurance company helps to attract business.
The largest liability of insurance companies is provisions and reserves—$32.4 billion for TransAmerica in 1998. This represents the present value of expected future obligations of the company—annuities and death benefits, net of the present value of premiums expected to be paid by policyholders.
Page 451
Exhibit 22.2 TransAmerica—Historical Income Statement

$ million 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Net premium income 3.195 2,903 2,946 1,221 1,256 1,495 1,863 1,848 1,818 1,847
Interest income (investments) 1,434 1,640 1,764 1,578 1,750 1,783 1,990 2,102 2,169 2,274
Realized capital gains 61 20 6 8 39 23 53 39 42 362
Interest income (loans) 1,213 1,173 1,056 1,014 990 1,042 1,165 1,198 503 705
Other revenues 931 967 1,043 1,167 798 1,012 1,030 1,040 1,195 1,241
Total revenues 6,834 6,703 6,815 4,988 4,833 5,354 6,101 6,228 5,726 6,429
Benefits and claims (3,462) (3,561) (3,715) (2,450) (2,146) (2,356) (2,859) (2.806) (2,811) (2,878)
Amortization of acquisition costs (459) (461) (529) (135) (233) (182) (191) (269) (265) (269)
Other expense (1,655) (1,553) (1,791) (1,183) (1,195) (1,451) (1,536) (1,595) (1.551) (1,789)
Total operating expenses (5,577) (5,576) (6,035) (3,768) (3,574) (3,990) (4,586) (4,669) (4,628) (4,936)
Interest expense (804) (758) (637) (569) (512) (574) (717) (690) (421) (429)
Income before exceptional provisions 454 369 143 651 748 791 799 868 678 1,063
Exceptional provisions 0 0 0 (91) (147) (101) (94) (283) (16) 0
Income before taxes 454 369 143 560 601 690 705 585 662 1,063
Income taxes (122) (103) (44) (218) (150) (262) (235) (129) (130) (356)
Income before extraordinary items 332 266 99 343 451 428 471 456 532 707
Extraordinary items 0 0 (49) (100) (73) (D 0 0 262 0
Net income 332 266 50 243 377 427 471 456 794 707
Beginning retained earnings 1,875 2,047 2,150 2,036 2,100 2,298 2,557 2,866 2,920 3,331
Net income 332 266 50 243 377 427 471 456 794 707
Common dividends (144) (148) (152) (157) (156) (143) (137) (132) (128) (125)
Preferred dividends (17) (16) (12) (22) (24) (25) (18) (17) (3) 0
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