《资本市场和金融机构6知识课件》由会员分享，可在线阅读，更多相关《资本市场和金融机构6知识课件（22页珍藏版）》请在金锄头文库上搜索。
1、Ch 3 Insurance Companies (Based on Saunders et al, 2006)Outline1.Insurance Companies: Introduction1.Differences and commonalities with depository institutions2.Quick Facts about Insurance Companies in Canada3.Life Insurance Companies1.Types of life insurance2.Other financial services3.Health Insuran
2、ce4.Ownership5.Balance Sheet6.Property and Casualty Insurance Companies7.How do Insurance companies deal with adverse selection and moral hazard?8.Conclusionsn11. IntroductionWhy do people buy insurance? A:nInsurance companies (IC) are in the business of assuming risk on behalf of their customers in
3、 exchange for a fee, called premium.nInsurer Profits = total premium actual claims to the IC.nPremiums Peoples expected amount of any loss suffered. n2 2. Quick Facts about Insurance Companies in CanadanCanadian and Foreign Company Operations in Canada1980 = 170; 1998 = 129, 2002 = 109, 2005=95nHeal
4、th insurance protection was provided to Canadians by 83 life insurers and 44 property and casualty insurers.nWorking in the industry were 118,900 Canadians 52,700 full-time employees and agents, and 66,200 independent agents. nMajor life insurance companies in CanadaManuLife Insurance, Sun Life Fina
5、ncial, Great-West Lifeco, others: Desjardins Financial, Allstate Canada, Standard Life). Former 3 control more than 50% of the market.n3Great-West profit up 49% (National Post 30Apr04)Great-West Lifeco Inc., Canadas third-largest insurer by assets said first quarter profit jumped 49%, bolstered by r
6、evenue from its July purchase of Canada Life Financial Corp.Net income climbed to $376-million, or $0.83 a diluted share, from 253-million ($0.68) a year earlier, the company said in a statement.However, the stock price drops at the close on the announcement day almost $2. Why?n53.Life Insurance Com
7、paniesnLife insurance firms collect premiums during a persons lifetime that must be invested until a death benefit is paid to the insurance contracts beneficiaries.n6Biggest Life Insurersn7nTypes of Life InsurancenIndividual Life Insurance: Tailored to specific needs of policy holder.nCostly compare
8、d to group life insurancenWhole life insurance: It combines a death benefit with a kind of savings plan (surrender value). nTerm insurance. It covers a specified period of time and pays the face amount upon death but accrues no cash value. nUniversal Life and Variable Universal Life. More popular: I
9、t combines a term life insurance and one for savings. The policyholder can change the maturity and amount of premium. nCredit life insurance. Protects lenders against a borrowers debt prior to the repayment of a debt (e.g., mortgage or car loan)nGroup Life Insurance: Cover a group of people under a
10、single policynDecrease adverse selection and moral hazard. nTerm insurance only. n8Other financial services:nWealth managementSale and management of annuity contracts, and registered retirement savings plans (RRSP) RRSP. Plan in which tax deductible contributions are made to accumulate a retirement
11、fund. nManagement of pension funds.n9nLife annuity (longevity insurance): Reverse of life insurance. n nWhile While life insurancelife insurance involves different contractual methods to build up a fund and the eventual payout of a lump sum to the beneficiary,n AnnuitiesAnnuities involve different m
12、ethods of liquidating a fund over a long period of time nIt involves a periodic payment to the annuitant until his or her death (mostly). n10Numerical example: Life Insurance vs. Life AnnuitynLife Insurance (insurance against early death)nPeter Lewis is 55 yrs old. He bought an insurance life contra
13、ct that will pay $20,000 to its beneficiaries when he dies. His yearly contributions are $1,200 indefinitely. Assume a life expectancy of 78 years. Also suppose that $1 today is worth $1 any time in the future. Determine the profit (loss) of the insurance company if he diesnfive years later. A: Prof
14、it = Premium Insurance Claim = $1,200*5 - $20,000= -$14,000nat the age of 78 years : A: $1,200*23 - $20,000 = $7,600 (Normal or Expected Profit)nat the age of 90 years: A: $1,200*35-$20,000 = $22,000 nLife Annuity (longevity insurance)nPeter Lewis is 55 yrs old. He invested in a life annuity contrac
15、t the lump sum of $27,600. Under this contract the insurance company will pay $1,050 indefinitely until his death. Assume a life expectancy of 78 years. Also suppose that $1 today is worth $1 any time in the future. Determine the profit (loss) of the insurance company if he diesnfive years later. A:
16、 Profit = Premium Insurance Claim = $27,600 - $1,050*5= +$22,350nat the age of 78 years : A: $27,600 - $1,050*23 = $3,450 (Normal or Expected Profit)nat the age of 90 years: A: $27,600 -$1,050*35 = -$9,150n11nThere are many types of annuities addressing different clientele needs. nThe payment of the accumulated funds through annuities vary in features such as nmaturity, ngroup or individual, nfor immediate or deferred disbursement, nliquidated after retirement, nfixed or variable payment and so
