PROJMGNT 2021 Project Management For Insurance Companies
1. Does this solution have significant disadvantage?
2. Does the disadvantage exceed the advantage?
3. Does the solution meet the criteria set for successful consideration?
Answer:
Introduction
Insurance is something that every individual is supposed to have. There are mandatory insurance covers when one buys a car whereby the life insurance is automatically integrated into most countries. The point is Insurance is something that people can rarely cut back on. Keeping this in mind, Insurance stocks are a great investment on a long-term basis. The returns on investment for some of the largest insurers in Australia will be discussed. However, it is important to note that the exposure of insurers to different sectors makes them a little different investment propositions. The main objective of this paper is to analyze the stock performance for a number of Insurance companies that have been indexed in the ASX.
The Criteria for Insurance Group
d> |
5 |
4 |
3 |
2 |
4 |
5 |
2 |
|
Company |
P/E |
Dividend |
Focussed |
Deb equity Ratio |
balance sheet |
got Feeling |
Customer growth |
Total |
Amp Limited (AMP) |
16.4 |
5.02 |
3 |
-- |
4 |
4 |
4 |
36.5 |
Aub Group Limited (AUB). |
20.32 |
3.94 |
4 |
30.1 |
2 |
4 |
4 |
68.36 |
Cpl Corporation Limited (CBL). |
16.11 |
0.74 |
4 |
-- |
3 |
3 |
7 |
33.85 |
Graphical performance of amp Ltd.
The share movement of the AMP group limited (AMP) for a period of 16 months. The highest point in the graph was recorded in June 2018, while the lowest point was recorded in November 2018.This clearly indicates an appropriate point to buy the shares (Bernoth, & Pick, 2011).
Exponential moving Average for AMP ltd.
The above graph shows the price movement for shares of AMP group ltd for six months, which belong to the Insurance industry. The diagram shows two points where the Exponential moving average makes intersections with the price action. The first crossover is at the lowest point hence the best point to buy the shares while the highest point showing the best time to sell. The Moving average largely depends on the recent close. Ending with a weak close, the shares are expected to bounce back to a buy (Suriadi et al., 2013).
The Graphical Performance of Aub Group Limited
The above graph illustrates the price movement of shares of the Aub group limited (Aub) for 6 months. The highest value of the shares was recorded in September 2018. Therefore it is the most appropriate point to sell the shares.
The exponential Moving average of Aub group limited
During the past one year, shares for the AUB group limited have had a moderate move. The first crossover of 27th March indicates where the shares made a lower move. This implies that it was the most appropriate time to wait for a reversal and buy the shares. In contrast, the lowest crossover between the price action and the moving average shows the cheapest price, and therefore it was appropriate to buy (Fan et al., 2012).The most recent time of share analysis was conducted in 8th August 2018, with the MA crossovers on the graph proves that the AUB shares will decrease in value after the analysis date.
The Graphical Performance of CBL Group Limited
Exponential Moving Average for CBL group limited
The above graph shows the movement of shares of CBL group limited showing a period of 6 months. The pattern is “lower highs” which act as trend confirmation (sell). This kind of a pattern acts as a confirmation of a trend continuation. The first high in August 2018, which the highest point of the current trend. The second lower high in July 2018 is an indication of a confirmed reversal of the initial trend and thus supply is increasing.
About The Insurance Industry
Australia’s Insurance industry has a lot in its plate. Political and financial upheaval within the country has been changing some of the ground regulations about how insurance companies might operate. An accelerating transformation in the way Insurance business is conducted in the country by innovation and increased consumer expectations (Cao, & Narayanamoorthy, 2011).In particular insurance companies have been racing to keep up with the changing market conditions. However, after analyzing the annual insurance outlook, we identified that most insurers have remained focused on two major objectives: growing top-line shares while bolstering bottom-line profitability (Cummins,&Weiss,2013).The most challenging thing barring the industry from achieving this is the catastrophe of losses and the increasing interest rates. However, the way Insurers anticipate and prepare to the changing conditions is well within their control and can assist in differentiating them in the market.
The Australian Insurance industry is made of the general insurance companies and the reinsurers. General insurance companies underwrite insurance policies in order to safeguard individuals and business from any form of financial losses incases any of the associated risks occur. Underwriting often involves various forms of risks within the existing insurance policies that have been underwritten by the insurer (Fan, So, & Yeh, 2006).Currently, the industry has been by multiple challenges ranging from numerous claims of natural disaster and also the number of clients has been on the rise. However, the industry is also developing as the number of insurance companies has increased beyond 20 (Eling, & Luhnen, 2010).
In order to ensure that the industry maintains its revenues, companies have now focused on cost management strategies through simplification of key processes, outsourcing arrangements and conducting large-scale transformation programmers. These strategies are highly demanding changes in management capabilities to keep up with the evolving risk profiles .The insurance conditions in the share market are that the market might be hard or soft due to the underwriting cycle. Soft market conditions can be described as the conditions when insurance losses are small and the prices are very reasonable (Black, & Kirkwood, 2010). Hard market situations are when the losses of an insurance company are beyond the expected threshold and reserves can no longer be able to cover the accrued losses (Sandoval,2014).The Insurance industry is in constant change by the market conditions as it follows the market tendency.
Conclusion
From the above analysis, the Australian Insurance market is mature, professional and well regulated. A common attribute of the analyzed companies is that they are competitive. The Australians Insurance industry is an enabler for businesses and individuals to conduct their daily operations with confidence. While all efforts are made to ensure that Insurance companies maintain their market share, risks cannot be eliminated but can be transferred through various insurance channels.
References
Bernoth, K., & Pick, A. (2011). Forecasting the fragility of the banking and insurance sectors. Journal of Banking & Finance, 35(4), 807-818.
Black, S., & Kirkwood, J. (2010). Ownership of Australian equities and corporate bonds. Reserve Bank of Australia Bulletin, 25-34.
Cao, Z., & Narayanamoorthy, G. S. (2011). The effect of litigation risk on management earnings forecasts. Contemporary Accounting Research, 28(1), 125-173.
Cummins, J. D., & Weiss, M. A. (2013). Analyzing firm performance in the insurance industry using frontier efficiency and productivity methods. In Handbook of insurance (pp. 795-861). Springer, New York, NY.
Eling, M., & Luhnen, M. (2010). Frontier efficiency methodologies to measure performance in the insurance industry: Overview, systematization, and recent developments. The Geneva Papers on Risk and Insurance-Issues and Practice, 35(2), 217-265.
Fan, D. K., So, R. W., & Yeh, J. J. (2006). Analyst earnings forecasts for publicly traded insurance companies. Review of Quantitative Finance and Accounting, 26(2), 105-136.
Fan, J. P., Titman, S., & Twite, G. (2012). An international comparison of capital structure and debt maturity choices. Journal of Financial and quantitative Analysis, 47(1), 23-56.
Suriadi, S., Wynn, M. T., Ouyang, C., ter Hofstede, A. H., & van Dijk, N. J. (2013, June). Understanding process behaviours in a large insurance company in Australia: A case study. In International Conference on Advanced Information Systems Engineering (pp. 449-464). Springer, Berlin, Heidelberg.
Sandoval, L. (2014). Structure of a global network of financial companies based on transfer entropy. Entropy, 16(8), 4443-4482.
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