Modeling of financial mechanisms of investment activity on the example of insurance companies of the Republic of Uzbekistan

Formation of an investment portfolio developed by Markowitz G.
According to this methodology, it is necessary to proceed from the required ratio of profitability and risk, as well as to organize the optimal choice of assets. The essence of this technique is as follows: if we correctly choose a portfolio of assets, then the portfolio acquires new characteristics that are not reducible to the characteristics of individual assets.
Suppose that a certain insurance company "A" has certain funds for investment activities, these funds can be invested for a specific time, which is called the "holding period". At the end of this period, the insurer spends the received income on consumption, or reinvests the income in the stock market (purchase of securities). Imagine t₀ - the beginning of the period, t₁ - the end of the period.
At the beginning of period t₀, the insurer must decide to purchase specific securities that will be in his portfolio until the end of period t₁. Decision making at time t₀, portfolio return is certainly unknown. However, the insurance organization (investor) evaluates the expected return on various securities, then naturally invests in securities with the highest probability of return. Diversification is important here, since the goal is to maximize profit while minimizing risk. The calculation of the yield of a security for a single period occurs in accordance with the formula. In this formula, “wealth at time t₀” is the price of one security that the insurer acquired (bought) at the beginning of period t₀, “wealth at time t₁” is the price of this security at the end of period t₁, including all payments t_o the investor - to the insurer.

Calculation of the yield of a security of insurance companies

As we already know, an insurer's investment portfolio consists of various securities and their yield, let's imagine the formula:

In this formula - % profitability, – the total purchase price of all securities included in the portfolio of the insurer for the initial period t₀, - market value of securities at the end of the period t₁. Income of the insurance company from securities since the period t₀ before the period t₁. From this formula we transform and get :

Thus, the investment department of an insurance company decides to buy a portfolio at the beginning of the period t0, naturally, the department's employees do not know the level of return of most alternative portfolios. In this case, it is necessary to comply with the recommendations of Marokovits G., who stated that the level of return associated with any of these portfolios should be considered a random variable. One of these variables is the expected return (potential reward) and the other is the standard deviation (a measure of risk). G. Markowitz argued that the insurer must make a decision in accordance with the structure - portfolio models solely on the expected return and standard deviation. After evaluating the expected return and standard deviation of each model, the most profitable best fit is selected based on these parameters. The goal of the investment department of each insurance company is efficient investment activity. To do this, it is necessary to properly organize the investment policy, form an optimal investment portfolio.
The classifier "OPTIMIZATION" serves the above criteria, includes such basic financial mechanisms as the term of investments, types of investments, marginal profit, degree of risk. The correct choice of these mechanisms will serve the effective effectiveness of the investment activity of the insurer. We will analyze each financial mechanism in more detail.
According to the terms of investment, short-term, medium-term and long-term investments are distinguished. In our model, we chose medium-term investments, because it is with medium-term investment that the insurer's funds are returned within up to three years. This time period is acceptable in the investment activity of the insurer. In conditions of strong competition, insurance companies are always interested in the return of funds, as well as with a certain profit. Working capital is the most liquid, because quickly converted into cash.
As many economists point out, it is marginal profit that is the marginal profit that an insurer can receive from an investment. Employees of the investment management departments of insurance companies should study the average market profit margin.


Classifier "OPTIMIZATION" in improving the financial mechanisms of investment activities of insurance companies
Any investment carries an element of risk. Risk certainly allows you to earn and lose invested funds. Being engaged in investment investments, the insurer must understand the quantitative and qualitative characteristics of the risk to which the capital of the insurer is exposed. Degrees of risk, in turn, are divided into acceptable, catastrophic, critical. The "OPTIMIZATION" classifier offers only acceptable risk levels.
In this classification, the last stage is the application of the NEOS algorithm, which allows improving the investment activities of insurance companies.
The first step of the NEOS algorithm is a mandatory step, it studies the investment activities of similar insurance companies, and also considers possible options for investment activities.
The next step is to identify potential investment items at a certain point in time, as well as data on the amount of own funds and temporarily free own funds.
The third stage of the algorithm is to determine the optimal time period for investment, in which the investor-insurer makes the maximum benefit from the implementation of the investment project.
The fourth action of this algorithm is the need for experienced specialists - managers. It is investment managers who analyze possible directions, objects for investment, choose the most effective options, taking into account all possible risks and, of course, the expected return.
The fifth element of the algorithm minimizes the risks of investment.