- •Financial market: notion, structure and infrastructure.
- •Notion, functions, types of financial intermediaries. Financial intermediaries in Russia.
- •International foreign exchange market: functions, participants, operations.
- •Foreign exchange risks: definition, types, insurance methods.
- •3 Types of currency risk:
- •Definition and types of exchange rates. Exchange rate forecasting, currency parity. Factors of exchange rates.
- •Foreign exchange regulation: purposes and instruments.
- •International securities market: definition, structure, participants.
- •Financial system of a country: structure, interrelation between the elements.
- •Budgetary system of a country: principles of construction, structure, Russian and foreign experience.
- •12. State budget revenues and expenditures.
- •Income distribution
- •13. Public debt and sources of its formation.
- •14. Federal budget of the Russian Federation: revenues, expenditures, modern peculiarities.
- •Imf's main responsibilities:
- •2.1 Over the counter (otc) and exchange-traded derivatives
- •2.2 Forward contracts
- •2.3 Futures contracts and their difference to forwards
- •2.4 Options
- •2.5 Swaps
- •Interest rate swaps,
- •19. Securities market regulation in Russia and abroad.
- •20. Professional activity on securities market.
- •21. The problem of risk and the notion of insurance. Functions of insurance company.
- •Insurance aids economic development in at least seven ways.
- •22. Features of corporate insurance products. Commercial insurance.
- •23. Notion and purpose of reinsurance. Types of reinsurance contracts.
- •25. Obligatory and voluntary types of insurance in Russia and abroad.
- •Voluntary:
- •Voluntary:
- •27. Bank liquidity: notion, analysis, regulation.
- •29. Bank’s credit risks: methods of evaluation and minimization.
- •Interest Rate Risk
- •30. International banks: transactions and risks.
- •31. Monetary policy: purpose, types, tools.
- •32. International credit: notion, functions, forms, tendencies.
- •33. Credit market: functions, participants, instruments, indicators.
- •34. Analysis of a borrower’s creditworthiness by banks.
- •7 Functions of financial management:
- •37. Structure of a company’s balance sheet. Analysis of assets and liabilities structure
- •39. Capital structure and company’s cost of capital.
- •42. Classification of sources of corporate financing.
- •Instruments
- •Issuing and trading
- •Valuation
- •Ipo via foreign bank
- •44. Corporate credit policy.
- •Various Types of Corporate Credit and Corporate Credit Policy
- •45. Types of financial risks, quantitative analysis.
- •46. Investment portfolio construction: calculation and analysis of risk and return.
- •48. Types of bonds, calculation of present value of discount and coupon bonds. Types of bond yield.
- •50. Capital Assets Pricing Model (capm).
- •52. Price structure and its components. Factors of a price.
- •53. Methods of pricing.
- •55. Profit taxation in Russia.
- •56. Taxation of foreign corporate entities in Russia.
- •57. Income taxation of individuals.
- •59. Tax planning: notion, purposes, stages.
23. Notion and purpose of reinsurance. Types of reinsurance contracts.
Reinsurance is a method used by an insurance company in order to reduce its liability for a policyholder. This method consists of transferring a part of the policyholder’s coverage to another insurance company.
The purpose of reinsurance is to share large risks with other companies. It also allows an underwriter to assume more liability.
Benefits of reinsurance are:
• Expansion of an insurance company capacity
• Stabilization of its underwriting results
• Financing of its expanding volume
• Securitization of catastrophic protection against shock losses
Reinsurance absorbs and distributes the effects of the insurance industry’s losses so that no single company is overburdened with the financial responsibility of offering coverage to its policyholders. Without reinsurance, the effects of unexpected catastrophes, unanticipated liabilities or a series of large losses could be too great for an insurer to absorb, forcing it into insolvency.
Reinsurance serves to limit liability on specific risks, to increase individual insurers’ capacity, to share liability when losses overwhelm the insurer’s resources, and to help insurers stabilize their business
Direct Insurer, who transfers a part of its obligations to a reinsurance company, is called a ceding company.
Functions of reinsurance
Risk transfer: the main use of any insurer that might practice reinsurance is to allow the company to assume greater individual risks than its size would otherwise allow, and to protect a company against losses. Reinsurance allows an insurance company to offer higher limits of protection to a policyholder than its own assets would allow.
Income smoothing: reinsurance can help to make an insurance company’s results more predictable by absorbing larger losses and reducing the amount of capital needed to provide coverage.
Surplus relief: an insurance company's writings are limited by its balance sheet. When that limit is reached, an insurer can stop writing new business, increase its capital or buy "surplus relief" reinsurance. The latter is usually done on a quota share basis and is an efficient way of not having to turn clients away or raise additional capital.
Arbitrage: an insurance company may be motivated by arbitrage in purchasing reinsurance coverage at a lower rate than what they charge the insured for the underlying risk.
Contract Types
Reinsurance contracts can be split between two basic types that can further be subdivided into three different subcategories. The first two basic types of reinsurance contract that exist are
the treaty (automatic risks) : under a treaty contract, a reinsurer agrees to cover all risks that the insured is writing during the specified period within the stated parameters set out in the treaty. The ceding company, in this case, provides the reinsurers with a list of risks ceded to the treaty- bordereau.
the facultative (individual risks): under a facultative contract, the reinsurance contract will cover risks on an individual basis.
The form the coverage takes can be split into either of
excess-of-loss,
proportional,
loss portfolio transfer.
An excess-of-loss approach covers losses arising above a specified loss threshold that the ceding insurer retains.
Under a proportional approach, the ceding insurer will simply share all losses, fees and premium on a pre-determined basis with the reinsurer.
A transfer of portfolio losses is an agreement under which the ceding company will transfer all reserves that it has accumulated for a block of policies to the reinsurer.
Types of reinsurance cover:
• Proportional- premiums and claims are divided between insurer and reinsurer at a defined ratio
- Surplus treaty- reinsurer agrees to accept some amount of insurance on each risk in excess of a specified net retention.
- Quota-share- a fixed proportion of every risk is reinsured.
• Non-proportional- premiums and claims are not fixed when the cover starts (based on losses rather than sums insured)
- Excess of loss- when a claim exceeds an agreed amount
- Stop loss- protects a cedent against an aggregate amount of claims over a period, in excess of a specified percentage of the earned premium income.
24. Revenues, expenses and profit of insurance company.