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Full-Text Articles in Business
Exploring Mechanisms Insurers Employ To Set Premiums And Maximize Profitability, Brent Ferenczy
Exploring Mechanisms Insurers Employ To Set Premiums And Maximize Profitability, Brent Ferenczy
Senior Honors Theses
The insurance industry is a very complex segment of the macroeconomy. An explain will be given as to how these companies are able to maintain and maximize their profits, allowing them to remain in business. A key area in this process is the setting of premiums. This activity draws from many areas of the business model. This paper will start with a birds-eye view and telescope in, starting with standard business practices and ending with specific undertakings of insurance companies. Companies must keep adequate liquid funds. This is done mainly through forecasting cash outflows and investing their assets under management. …
Private Equity Value Creation In Finance: Evidence From Life Insurance, Divya Kirti, Natasha Sarin
Private Equity Value Creation In Finance: Evidence From Life Insurance, Divya Kirti, Natasha Sarin
All Faculty Scholarship
This paper studies how private equity buyouts create value in the insurance industry, where decentralized regulation creates opportunities for aggressive tax and capital management. Using novel data on 57 large private equity deals in the insurance industry, we show that buyouts create value by decreasing insurers' tax liabilities; and by reaching-for-yield: PE firms tilt their subsidiaries' bond portfolios toward junk bonds while avoiding corresponding capital charges. Previous work on affiliated or "shadow" reinsurance and capital management misses the important role that private equity buyouts play as recent drivers of these phenomenon. The trend we document is of growing importance in …
A Changing Industry: An Analysis Of The Effects Of Direct-To-Consumer Advertising On The Insurance Industry, James Bonvicini
A Changing Industry: An Analysis Of The Effects Of Direct-To-Consumer Advertising On The Insurance Industry, James Bonvicini
Honors Scholar Theses
Direct-to-consumer selling is a shift in the strategies of many companies. As technology continues to play a prominent role in business, companies need to adapt to accommodate, and take advantage of, new opportunities that become available. Many insurance companies are now focusing on improving their direct-to-consumer selling efforts and attracting consumers with new online selling platforms. This thesis looks at the changes inside and outside of the industry that led to this direct method of selling and the impact that this has on the intermediaries in the industry, with a focus on property and casualty businesses. Additionally, this thesis takes …
Product Innovation In Financial Services: A Survey, Christopher O'Brien
Product Innovation In Financial Services: A Survey, Christopher O'Brien
Journal of Actuarial Practice (1993-2006)
This paper considers product innovation in insurance and other financial services, an area where actuaries have an important role. It considers the proposition that there is no unique formula for success and that what works well in one situation may not work well in another. It first examines the sources of ideas for new products and, in particular, the role played by consumers, which is generally regarded as weak. It then looks at how ideas are implemented, with particular importance attributed to cross-functional teams and the formality of the product development process. Then it considers how success is measured (with …
Concentration In American Property-Casualty Companies, Edward Nissan
Concentration In American Property-Casualty Companies, Edward Nissan
Journal of Actuarial Practice (1993-2006)
A Theil's entropy index utilizing premiums written as units is employed to measure trends in concentration of the largest 200 property-casualty companies in the United States between 1985 and 1993 based on Best's Insurance Report data. Each of the indexes confirms that concentration trends experienced no increase for the whole period for all 200 firms, the top 20, and subsets of lower ranked companies. Significant differences are observed, however, between groups of companies for the same period.
Managing The Costs And Risks Of Housing Finance: A New Role For Actuaries, Anthony Asher
Managing The Costs And Risks Of Housing Finance: A New Role For Actuaries, Anthony Asher
Journal of Actuarial Practice (1993-2006)
Housing finance is a nontraditional field where actuarial expertise could be applied fruitfully. The development of mortgage instruments requires the application of financial mathematics, while the evaluation and management of the financial risks to which borrowers and lenders are exposed require a knowledge of insurance principles. This paper splits the financial costs of home ownership into several components: those that arise from inflation, risk, administration, and the residual real interest charge. The risk component further is partitioned into life contingencies, economic contingencies, and various moral hazards. This analysis provides a basis for future financial innovation, highlights where government intervention may …