Model of projection of the cash-flows

Using as inputs the variables coming from the generator of stochastic scenarios and decision variables representing the strategic choices of which the consequences have to be assessed by the model, for example strategic asset allocation of the assets, pricing variables of the contracts, new structure of distribution of the insurance contracts, etc. The model has to project the cash-flows relative to the assets of the company and those relative to its liabilities for the given horizon of projection. During the same process, projected balance sheets and P&L accounts of the insurance company are also built.

Of course, the complexity of the models may vary a lot, depending on the knowledge acquired about the risks and the business processes of the company, on the degree of accuracy wished and on the efforts devoted to the development of the model.