Understanding Financial Underwriting with Susan Kerr
Explore the world of financial underwriting with Susan Kerr, the Underwriting Director at Manulife. Discover the purpose, basics, and advanced concepts of financial underwriting, including key considerations like income multiples, estate planning, and key person insurance. Gain insights into maintaining favorable tax status, aligning premiums with income persistency, and ensuring long-term business profitability. Join Susan Kerr as she shares her expertise and insights on financial underwriting in 2022.
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FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? Susan Kerr Underwriting Director Susan joined Manulife in 1999 and has more than 15 years of underwriter experience in various production and management roles. She is currently Director of Special Case Operations and leads a specialized and proactive multidisciplinary team comprised of underwriters, case coordinators and quoting specialists. This team s objective is to implement creative solutions on Manulife s largest cases while delivering a superior customer experience with concierge service. Susan has Bachelor s (Biology) and Master s (Pathology) degrees from Queen s University. Susan will provide an Insider s View of Underwriting and highlight some of the initiatives the team is working on in 2022.
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr AGENDA | HIGHLIGHTS Purpose of financial underwriting Basics Advanced Concepts Financial statements/evidence Business Valuations
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr PURPOSE OF FINANCIAL UNDERWRITING Avoid unpredictable losses Ensure favourable tax status of insurance is maintained Place profitable long term business Avoid speculation Annual premium is aligned with income persistency If premiums represent a significant portion of income, where are they coming from? Suitability of sale
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr BASICS Income multiples: Determined as guideline of reasonableness Ensures low risk of moral hazard Estate considerations: Capital gains payable on death Estates will grow Consider the following: NW growth = 15 years (or Life Expectancy) at X% /2 = Future NW Growth beyond 15 years is difficult to project
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr BASICS Key person insurance 5 10 x income Business insurance Designed to resolve buy sell, liabilities and pass business to next generation Understand the business Going concern? Start up? What do they sell/produce? How does the business generate income
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr ADVANCED CONCEPTS Insurance as an investment Estate maximization Offset capital gains at death Tax sheltering investments Estate protection Charitable giving
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr ADVANCED CONCEPTS Understand the purpose of the sale What is the client trying to achieve? Where is the premium coming from? NW Investments Financing AML rules satisfied
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr FINANCIAL STATEMENTS Review engagement or audited Holding vs Operating company What does the company sell/produce? Inventory method Depreciation rates Notes IMPORTANT Loan interest rates Litigation Relationship to other companies
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr BUSINESS VALUATION Various methods Most commonly used = multiplier x earnings Type of business determines the multiplier Years in operation determines multiplier Location determines the multiplier Important to understand industry, geography, economic conditions
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr FINANCIAL UNDERWRITING GOALS FOR THE UNDERWRITER Assess application for: Potential for financial loss Early lapse Misrepresentation or fraud Does It Make Sense?
STAY TUNED!
FINANCIAL UNDERWRITING: DOES IT MAKE SENSE? with Susan Kerr THANK YOU For more information, don t forget to visit our website: www.advocis.ca Questions? Please email: communications@advocis.ca To contact us about Coffee Talks: events@advocis.ca
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