In recent years, the Ukrainian insurance market has been growing in need to assess the value of insurance companies, which is due not only to a change in the management paradigm of the company, but also to objective market processes occurring in the state.
The purpose of the study is to substantiate methodological approaches to determining the market value of an insurance company when using a revenue approach with the forecasting of cash flows of the insurer under different options for the development of insurance activities.
The income approach determines the value of the company (business) based on the estimation of discounted cash flows generated by it. It is based on the principle of expectation that any asset acquired for the purpose of generating income is worth as much as it will bring in the future in the light of the time factor.
In modern economists’ works a large number of methods and models of discounting are presented within the income approach, the article analyzes the problems of their application for the assessment of Ukrainian insurance companies.
The author suggests an algorithm for calculating the cost of an insurance company by discounting cash flows taking into account the specifics of the insurance business, with an approach to determining the cost of capital of the insurer, estimating the amount of free cash flow (FCF) of the company.
The algorithm is approved in assessing the value of one of the Ukrainian insurance companies. The discount rate is calculated on the basis of the weighted average cost of capital model, using data on the company’s capital structure and the value of its individual components.
To predict future cash flows, the following steps have been taken: the choice of the initial data for forecasting, the construction of the regression equation, the forecasting of model parameters, the interval forecast of free cash flows. The lower limit of the forecast interval in each period is taken by the pessimistic value of the cash flow, the upper limit is optimistic, and the point value is moderate.
For each of the variants of development, the company’s residual value is also calculated, added to the amount of current cash flow values and the value of the insurer’s liabilities at the valuation date is taken. Thus, an estimate of the insurer’s value is given with an optimistic, pessimistic and moderate forecast of the activity of the insurance company.
The income approach allows carrying out variant calculations with regard to development and innovation in companies, using the methodology proposed in this research. 

insurance company value, income approach, discounted cash flow method, weighted average cost of capital, forecasting 

The aim of the research is to determine the methodological principles of constructing the optimal insurance portfolio based on reinsurance mechanism.
In the article the features of the use of proportional and non-proportional reinsurance covers and the division of responsibility between the cedent and reinsurer for each of them are analysed. The task of creating the optimal reinsurance program is considered; the research of optimality criteria when forming reinsurance programs is compiled: optimization of reinsurance in general is impossible without simultaneous consideration of both the expectation of random net results and the extent of their possible dispersal.
It’s determined that the most effective approach to optimize reinsurance cover is as follows: not the reinsurance program that gives the best and the most likely outcome, but the one that gives the best average result for the entire set of possible outcomes with regard to their probability must be considered as optimal protection. Summary of developments of theorists, practitioners, professional actuaries allows to conclude that a universal statement of reinsurance protection problem optimization does not exist because of the complexity of mathematical description and simulation of random processes (flow, reservation and settlement of damages), and because the strategic objectives and financial position of some insurers and their priorities in the reinsurance programs formation are so different that it is almost impossible to build a comprehensive and objective function and set universal limits for reinsurance optimization problems.
In general, the problem of choosing the optimal reinsurance protection for the insurer reduces to sampling optimal limits, quotas and own retention to the applicable types of reinsurance.
In a quota share reinsurance treaty, to achieve that goal insurer may change quota share and reinsurer’s limit, in surplus reinsurance treaty – the amount of its own retention and the quotient of reinsurance limit and own retention. Under the application of non-proportional reinsurance, the insurers may achieve the goal by changing their deductible and specified limit.
Based on the analysis of the real statistics of one of the insurance companies it was shown that for sufficiently large insurance portfolio certain loss ratio could be achieved at several values of reinsurer’s limits or insurer’s own retention – one need to choose that, which gives the highest net result from operating activities. 

reinsurance, types of reinsurance covers, sharing of responsibility, quota, net retention, loss ratio, optimization 

The absence in Ukraine of the single criteria for evaluation of the compensation of the human life and health costs hinders the further development of the field of social protection, insurance. This makes evaluation of the effectiveness of means directed at risk decrease and improvement of the safety system in industry, transport, communal services impossible. The development of Ukraine as a social democratic state in general is impossible too.

The human life costs in Ukraine are evaluated only in certain cases – by some types of obligatory insurance. Such estimate ranges from 7 to 250 thousand UAH and depends on the circumstances of the human life loss. There is no term “economic equivalent of the life cost” in Ukrainian law as well as the methodology of its evaluation and the state order for its development in the scientific institutions.

The aim of the investigation is the analysis of the methodological approaches to evaluation of the economic equivalent of the human life cost (EEHLC) from the viewpoint of the possibility of their use in Ukrainian conditions and the development of proposals on quantitative range values of this index for Ukraine.

In the performed investigation the methods of financial and actuarial mathematics have been used.

The possible approaches to evaluation of EEHLC that can be used in Ukraine are considered, in particular the assessing by the theory of human capital, “ by losses”, on the basis of the theory of usefulness (proceeding from the average income per person for the period of expected future life time and national average produce per person). It is proposed to use the tools of actuarial mathematics for EEHLC evaluation, in particular the net-tariffs for life insurance. The value of EEHLC for Ukraine is evaluated using the above approaches.

Results allowed us to conclude that in foreign and national literature on economics there is no common formal approach to assessing the human life cost; discussions concerning active search of new, more qualitative approaches to assessing EEHLC are going. Results obtained by different methods can differ significantly (in Ukraine, in particular, from 219 thousand UAH to 2.7 million UAH), since for evaluation different initial data and indices are used.

Taking into consideration the necessity of the balanced social demands of the society and the economic possibility of the state and managing subjects, based on the analysis, the quantitative range of values of the average statistical human life cost is proposed that can be recommended to be used in Ukraine in the present economic situation:

Analysing the calculations related with investment into the safety systems and labor protection, introduction of the preventive measures to decrease the risk; aimed at assessing the effectiveness of the health protection system – it is recommended to use the value of EEHLC within the range from 1 to 2 million UAH.

To evaluate the government or corporative payments for the families of persons who died in the emergency conditions, to establish the insurance costs in the system of personal insurance and liability insurance – it is recommended to use the value of EEHLC in the range from 200 to 500 thousand UHR.

The priority steps on practical introduction of EEHLC in Ukraine are described. It is noted that with the growth of economy, improvement of the people’s life standard, it is worth reviewing periodically the values of EEHLC, what is a necessary condition for the effective action of the economic methods of risk management. 

value of life, methodology, the economic equivalent of the cost of life, methods for human life value assessment