Hey Mpacman, FIG accounting is quite simple and is very common...

Hey Mpacman,

FIG accounting is quite simple and is very common amongst insurance businesses.

FIG receives an upfront cash commission for every policy they sell and then collects every month a cash trail commission for every policy they have sold prior.

These are the 2 main cash revenue items and these combined minus their total expenses provides their cash EBITDA figure.

They then take their trail asset book which is all future trail commissions and discount it back to today's value assuming churn rates calculations. This figure is added to the revenue line as the trail asset movement and is what provides their reported EBITDA which is not all cash. (Higher than cash EBITDA).

For high growth insurance businesses there will always be a large gap between cash and reported EBITDA - but that is a good thing because it means it's growing fast!

Over time as the business matures the two converge and are more in line. That means a more mature business/book.

This is just my opinion, and I could totally be wrong here ( so no advice) but hope that helps.