Asset Liability Management (ALM) In Determining Solvency and Profitability: A Case Study of CIC Life Assurance

Abstract

The aim of this research was to analyze the practices of asset Liability Management( ALM) at CIC Life Assurance. The study was significant because it analyzed how ALM practices at CIC Life assurance determined its solvency and profitability. This study’s main objective was to show how ALM determined the solvency and profitability of the company. To determine solvency, solvency and liquidity ratios were calculated while for profitability, ROA and ROE were calculated. The financial ratios calculated helped determine the financial position of CIC Life Assurance. Expected returns were calculated based on past data on beta and risk free rate. Expected returns help make investment decisions. Higher expected returns showed that investors would earn well in their returns and the company would also profit. The project specifically employed Capital Asset Pricing Model(CAPM)to calculate expected return and monte carlo simulation to assess fluctuating economic conditions. Data from January 2018 to December 2022 from the CIC database was obtained and used in the calculation of the ratios. The variables used for analysis were: Total assets, total liabilities, current assets, current liabilities, shareholder equity, net income. The results indicated that CIC Life Assurance is solvent and profitable.