Fabozzi金融市场与金融机构基础课后答案.docx

Fabozzi金融市场与金融机构基础课后答案.docx

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Fabozzi金融市场与金融机构基础课后答案

Fabozzi金融市场与金融机构基础课后答案（总12页）

CHAPTER6

INSURANCECOMPANIES

TYPEOFINSURANCECOMPANIES

Insurancecompaniessellinsurancepoliciesforapremium.Theyhavetwosourcesofincome:

underwritingincome,andinvestmentincome.

LifeInsurance

Thelifeinsurancecompanypaysthebeneficiaryofthelifeinsurancepolicyintheeventofthedeathoftheinsured.

HealthInsurance

Thehealthinsurancecompanypaystheinsuredalloraportionofthemedicaltreatmentoftheinsured.Untilthelastdecade,themajortypeofhealthinsuranceavailablewasindemnityinsurance.Duetothelackofconstraintsandincentivesforcostsavings,themedicalserviceinsuredbyindemnityinsurancebecameveryexpensive.Inresponse,variousformsofmanagedhealthcarehavebeendeveloped.Ingeneral,theseformsofmanagedhealthcareputconstraintsonthechoiceoftheproviderbytheinsuredandonthetypesofserviceprovidedbytheprovider.

PropertyandCasualtyInsurance

Propertyandcasualty（P&C）insurancecompaniesinsuretheriskofdamagetovarioustypesofproperty.

LiabilityInsurance

Theriskinsuredagainstislitigation,ortheriskoflawsuitsagainsttheinsuredduetoactionsbytheinsuredorothers.Thisistypicallyathird-partyclaim.

DisabilityInsurance

Disabilityinsuranceinsuresagainsttheinabilityofemployedpersonstoearnanincome.Typically,“ownocc”disabilityinsuranceiswrittenforprofessionalsinwhite-collaroccupations,and“anyocc”forblue-collarworkers.Therearetwotypesofpoliciesregardingthesustainabilityofthepolicy.First,guaranteedrenewableisatermwheretheissuerhastosustainthepolicyforaspecifiedperiodoftime,butcanchangethepremiumratesfortheentireclass.Theothertypeisnoncancellableandguaranteedrenewablewherebytheissuerhasnorighttomakeanychangesinanypolicyduringthespecifiedperiod.

Long-TermCareInsurance

Long-termcareinsuranceprovidescoverageforcustodialcarefortheagedwhoarenolongerabletocareforthemselves.

StructuredSettlements

Structuredsettlementsarefixed,guaranteedperiodicpaymentsoveralongperiodoftime,typicallyresultingfromasettlementonadisabilitypolicyorothertypeofpolicy.

InvestmentOrientedProducts

Aguaranteedinvestmentcontractorguaranteedincomecontract（orsimplyGIC）,isapureinvestmentproduct.InaGIC,alifeinsurancecompanyagrees,forasinglepremium,topaytheprincipalamountandapredeterminedannualcreditingrateoverthelifeoftheinvestment,allofwhichispaidatthematuritydate.Alifeinsurancecompanyagreesinreturnforapremiumtopaytheprincipalamountandapredeterminedannualcreditingrateoverthelifeoftheinvestment.Effectively,aGICisazerocouponbondissuedbyalifeinsurancecompanyandassuchexposestheinvestortothesamecreditrisk.SomeGICsrequireasinglepremiumpayment（bullet）,othersprovidewindowswhereindepositsareacceptedovertimeatthesameinterestrate.GICsarepopularcontractsforpensionfunds,sinceinterestrateriskassumedbyinsurancecompany.Butinvestorsstillhavetoworryaboutthecreditriskoftheinsurancecompany.

Annuity

Anannuityisoftendescribedasamutualfundinaninsurancewrapper.Theincomeandrealizedgainsarenottaxableifnotwithdrawnfromtheannuityproduct.Thus,the“insidebuildup”ofreturnsreceivesafavorabletaxtreatment.Annuitiescanbeeitherfixed,orvariable.Forasinglepaymentorpremiumtheinsurancecompanywillprovidefixedpaymentsforthelifeofthepolicyholder.Itcanalsoprovidea“lumpsum”paymenttotheretireeafteranumberofyearsofaccumulatingandinvestingpremiumpayments.

MonolineInsuranceCompanies

Monolineinsurersguaranteethetimelyrepaymentofthebondprincipalandinterestwhenabondinsurerdefaultsonthesepayments.Theinsuredsecuritieshavetraditionallybeenmunicipalbonds,buttheynowincludestructuredfinancebonds,CDOs,CLOs,andasset-backedbonds.MonolineinsurershavebeenratedAAAandmusthavethishighratingtobeeffectivesincetheytransfertheirratingtothebondissuebeinginsured.

INSURANCECOMPANIESVERSUSTYPESOFPRODUCTS

Traditionally,lifeandhealthproductswerecoupledbyaninsurancecompanybecauseofsomeofthesimilaritiesoftheproducts.PropertyandcasualtyproductswerealsoprovidedbyP&Ccompanies.Companiesthatprovidebothtypesofinsurances（life,health,property,casualty）arecalledmultilineinsurancecompanies.Investmentproductstendtobesoldbylifeinsurancecompanies.

Recently,healthinsurancecompanieshaveseparatedfromlifeinsurance.Thischangehasbeenduetomainlyfederalregulationofthehealthindustry.Lifeinsurancecompanieshavefocusedoninvestmentproducts.Also,disabilityinsuranceisnowsoldprimarilybypuredisabilitycompanies.

FUNDAMENTALSOFINSURANCEINDUSTRY

Afundamentalaspectoftheinsuranceindustryresultsfromtherelationshipbetweentherevenuesandcosts.Acompanycollectsitspremiumincomeinitiallyandinveststhesereceiptsinitsportfolio.Thepaymentsontheinsurancepolicyoccurlaterand,dependingonthetypeofinsurance,inaperhapsveryunpredictablemanner.Thepaymentsarecontingentonpotentialfutureevents.

Aninsurancepolicyisabindingcontractforwhichthepolicyholderpayspremiuminexchangefortheinsurancecompany’spromisetopayspecifiedamountscontingentonfutureevents.Theacceptedpolicyisanassetfortheownerandaliabilityfortheinsurancecompany.

Lifeinsuranceandpropertyandcasualtyinsurancecompaniesarefinancialintermediariesthat,foraprice,willmakeapaymentifacertaineventoccurs.Theyfunctionasriskbearers.Theprincipaleventthatthelifeinsurancecompanyinsuresagainstisdeath:

alifeinsurancecompanyagreestomakeeitheralumpsumpaymenttothebeneficiaryofthepolicyormakeaseriesofpayments.However,lifeinsuranceprotectionisnottheonlyfinancialproductsoldbythesecompanies.Amajorportionofthebusinessoflifeinsurancecompaniesisnowintheareaofprovidingretirementbenefits.Thekeydistinctionbetweenlifeinsuranceandpropertyandcasualtyinsurance（P&C）companiesisthedifficultyofprojectingwhetherapolicyholderwillbepaidoffandhowmuchthepaymentwillbe.

REGULATIONSOFINSURANCEINDUSTRY

Regulationisprimarilyatthestatelevelasaresultof1945federalstatute（McCarran-FergusonAct）.ModellawsandregulationsaredevelopedbyNationalAssociationofInsuranceCommissioners（NAIC）.Insurancecompaniesarealsoratedbytheratingagencies.

Toassurefinancialstability,insurancecompaniesmustmaintainreservesorsurplus,whicharetheexcessofassetsoverliabilities.Statestatutorysurplusrequirementsarecalledstatutorysurplus,whichisdistinguishedfromgenerallyacceptedaccountingprinciples（GAAP）surplus.

STRUCTUREOFINSURANCECOMPANIES

Insurancecompaniesarereallyacompositeofthreecompanies.Firstthereisthe“homeoffice”oractualinsurancecompany.Second,thereistheinvestmentcomponent,whichinveststhepremiumcollectedintheinvestmentportfolio.Thisistheinvestmentcompany.Thethirdisthedistributioncomponentofthesalesforce.Therearedifferenttypedofdistributionforces.Finallytherearealsobrokerswhosellinsuranceproductsofmanycompanies.

Insurancecompaniesareattractedbycommercialbankcustomercontacts.Asaresult,commercialbankdistributionofinsurancecompanyproductshasgrown.Thisrelationshipiscalledbankassurance.

FORMSOFINSURANCECOMPANIES

Therearetwoformsofinsurancecompanies:

stockandmutual.Astockinsurancecompanyissimilarinstructuretoanycorporationorpubliccompany.Shares（ofownership）areownedbyindependentshareholdersandaretradedpublicly.Theshareholderscareonlyabouttheperformanceoftheirsharesthatisthestockappreciationandthedividends.Theinsurancepoliciesaresimplytheproductsorbusinessofthecompany.Incontrast,mutualinsurancecompanieshavenostockandnoexternalowners.Theirpolicyholdersarealsotheirowners.Theowners,thatisthepolicyholders,careprimarilyorevensolelyabouttheperformanceontheirinsurancepolicies,notablythecompany’sabilitytopayonthepolicy.Sincethesespaymentsmayoccurconsiderablyintothefuture,thepolicyholdersviewmaybelongterm.

Finallyanewformofinsurancecompany,whichisahybridbetweenapuremutualandapurestockcompanyhasbeenapprovedbysomestatesandimplementedbysomeinsurancecompaniesinthesestatessincetheirintroductionin1996.Thisformiscalledamutualholdingcompany（MHC）.

INDIVIDUALVERSUSGROUPINSURANCE

Insuranceproductscanbesoldonindividualandgroupbases.Also,intheP&Cbusiness,insurerscansellpersonallinesandcommerciallinesofinsuranceproducts.

TYPESOFLIFEINSURANCE

Therearetwofundamentallydifferenttypesoflifeinsurance:

term（life）insuranceandcashvaluelifeinsurance.

TermInsurance

Termpoliciespayoffonlyondeath.Threearenoinvestmentbenefitsandsothepremiumsaresubstantiallylowerthanthoseonwholelifepolicies.Mostgrouppoliciesaretermpolicies.“Term”impliesthatcoverageisavailableonlyduringthepremium-payingtermofthecontract.

CashValueorPermanentLifeInsurance

Thereisabroadclassificationoflifeinsurance,whichiscashvalue,orpermanentorinvestmenttypelifeinsurance.Acommontypeofcashvaluelifeinsuranceiswholelifeinsurance.Thiscashvaluecanbewithdrawnandcanalsobeborrowedagainstbytheownerofthepolicy.Iftheownerwishestoletthepolicylapse,heorshecanwithdrawthecash