The participation of a publicly traded company forms an integral role in any world economy. A publicly traded company is that which provided financial and investment security services that may include shares, stocks, bonds and even loans. This economic involvement occurs through the stock exchange process, aided by the participation of willing investors and shareholders. The financial reports of such companies are governed by the Securities Exchange Act. In making reports, the publicly managed companies attract more financial pool, propelled by the acquisition of promising prospects at the time of its initial public offering. One of such publicly traded companies includes the Reinsurance Group of America, which offers a wide range of financial services and products through its market capitalization. (Powers, 2006)
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The Reinsurance Group of America (RGA) is instrumental in the provision of reinsurance services. It undertakes the process of policy and facultative underwriting, the management of risk, reinsurance product development and other capital oriented reinsurance services. The unique annual consolidated premiums net increase in the RGA captures the attention of every investor. The increase in the net premiums boosted by other options and average investment assets amidst the fluctuating dollar value is a unique fact in the economic point of view. In the management design forward-looking statements that are subjects to risks and uncertainties are used to incorporate future events and actual results in amore proactive manner. The provision of Pareto efficient capital and credit conditions area also vital management design strategy fact in the RGA. In addition to this, the maintenance of appropriate collateral and payment procedures that enable the determination of employees’ allowances and the economic balance between lapsation and claim is also an important design. (Powers, 2006)
The management of capital and credit market condition by the RGA forms an interesting and unique fact in the performance and design analysis. The RGA incorporates a unique portfolio balance that ensures the maximization of returns in the long run. This strategy ensures proper risk management and keeps off adverse fluctuations from profit margins. The strategy manages the possible fluctuations due to the fluctuations in the US currency against other word currencies. This therefore prevents arbitration financial results of the RGA or unfavorable litigation. As a result, there is the maintained performance in the economies with improved competitive factors and comparative advantage, hence the acquisition of adequate financial reserves and economic resources. (Powers, 2006).
Furthermore, the use of operating income by the RGA as a basis of analyzing the company’s financial performance has established efficient investment target levels that are critical in the management of traditional group life, assets base and other financial reinsurance factors. In this management strategy, the assumption is that a better profitability and pretax and after tax base is feasible, and eliminates the net effects of the operation externalities. In addition to this, the accumulative effect of any change in accounting process is excluded, giving an economically efficient condition of profit maximization (Powers, 2006). This strategy gives potential growth to the Reinsurance Group of America, due to the proper management of uncertainties and the development of new insurance products and successful implementation of efficient facilities. This in effect maximizes the performance economies of scale, hence increasing the opportunity set and the resource endowments that pool more premiums and financial securities like shares, bonds and other tradable offers. In this effect, the portfolio of the RGA is kept at efficient level, hence operation efficiency.
Powers, R. (2006), “A ‘Square-Root Rule’ for Reinsurance.’ Journal of Risk Finance, 6, 4, 319-334.