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This article demonstrates that rating-based capital requirements, through their impact on insurers' investment demand, affect corporate bond prices. Consistent with insurers' low demand for investment-grade bonds with a rating close to noninvestment-grade, these bonds outperform. Consistent with insurers' high (low) demand for investment-grade bonds with high (low) systematic risk exposure, these bonds underperform (outperform). Insurer demand, measured by insurer holdings, explains most of these pricing effects. We identify rating-based capital requirements as the driver of insurer demand, and thus the pricing effects, by showing that the effects do not exist before these requirements' implementation in 1993. [ABSTRACT FROM AUTHOR]

Studies find evidence that opportunistic reporting often accompanies fair value measurement. However, research has not determined whether the source of this opportunism is the estimate of fair value. Using detailed information on insurers' investment holdings, we separate the use of fair value measurement discretion from the application of non-measurement-related discretion in accounting for impairments of financial assets. Our evidence contradicts the view that fair value measurement discretion plays a large role in opportunistic avoidance of impairment recognition for investment securities. Instead, managers appear to avoid recording impairment losses by opportunistically applying subjective criteria regarding perceived loss persistence and intent to hold. Data Availability: Data are available from sources identified in the paper. JEL Classifications: G20; G22; G30; M41. [ABSTRACT FROM AUTHOR]

This paper considers an optimal investment and risk control problem under the criterion of logarithm utility maximization. The risky asset process and the insurance risk process are described by stochastic differential equations with jumps and anticipating coefficients. The insurer invests in the financial assets and controls the number of policies based on some partial information about the financial market and the insurance claims. The forward integral and Malliavin calculus for Lévy processes are used to obtain a characterization of the optimal strategy. Some special cases are discussed and the closed-form expressions for the optimal strategies are derived. [ABSTRACT FROM AUTHOR]

The article discusses the investments of insurance companies, particularly whether the performance of these portfolios is comparable to the investments of other industries while also assessing the dual risk that insurance companies undertake. It is noted that the results of this research do align with previous research on the adjustment of stock prices of capital assets. The article concludes that the investment portfolios of insurance companies do share similarities with the portfolios of other industries.

The article presents commentary and criticism on the report "The Valuation of Security Holdings of Life Insurance Companies," by Harold G. Fraine, included within the issue, discussing life insurance company investment evaluation. An overview of Fraine's initial thesis is provided and it is suggested that while his general concepts are valid, his conclusions could be taken further. In particular, the usage of market quotations as a basis for defaulted bond and common stock valuation is challenged.

The article discusses the paucity of investments U.S. life insurance companies hold in common stocks. Stocks amount to less than 1% of assets held by insurance firms. The author examines why equities are considered to be inappropriate holdings, and argues that these reservations are either unfounded or capable of being addressed. He believes excessive limitations on stock investments serve no good purpose. In his view the social advantages of increased equity investments would significantly outweigh the disadvantages.

In the context of an insurance portfolio which provides dividend income for the insurance company’s shareholders, an important problem in risk theory is how the premium income will be paid to the shareholders as dividends according to a barrier strategy until the next claim occurs whenever the surplus attains the level of ‘barrier’. In this paper, we are concerned with the estimation of optimal dividend barrier, defined as the level of the barrier that maximizes the expected discounted dividends until ruin, under the widely used compound Poisson model as the aggregate claims process. We propose a semi-parametric statistical procedure for estimation of the optimal dividend barrier, which is critically needed in applications. We first construct a consistent estimator of the objective function that is complexly related to the expected discounted dividends and then the estimated optimal dividend barrier as the minimizer of the estimated objective function. In theory, we show that the constructed estimator of the optimal dividend barrier is statistically consistent. Numerical experiments by both simulated and real data analyses demonstrate that the proposed estimators work reasonably well with an appropriate size of samples. [ABSTRACT FROM AUTHOR]

The operation of the portfolio balance channel has been emphasized by monetary policymakers as a key channel through which quantitative easing (QE) policies work. We assess whether the investment behavior of insurance companies and pension funds in the United Kingdom during the global financial crisis was consistent with such an effect by analyzing both sectoral and institution-level data. Our results suggest QE led to institutional investors shifting their portfolios away from government bonds toward corporate bonds but did not lead to a shift into equities. [ABSTRACT FROM AUTHOR]

In this paper, we study a barrier present value (BPV) maximization problem for an insurance entity whose surplus process follows an arithmetic Brownian motion. The BPV is defined as the expected discounted value of a payment made at the time when the surplus process reaches a high barrier level. The insurance entity buys proportional reinsurance and invests in a Black–Scholes market to maximize the BPV. We show that the maximal BPV function is a classical solution to the corresponding Hamilton–Jacobi–Bellman equation and is three times continuously differentiable using a novel operator. Its associated optimal reinsurance-investment control policy is determined by verification techniques. [ABSTRACT FROM PUBLISHER]

The author comments on the article "The Effects of Recent Credit and Debt Management Policies Upon Life Insurance Company Investments," by James J. O'Leary. The author explains that he learned four lessons from the article. One of the lessons was that there appears to be that general restrictions were more effective than the selective controls. The second lesson is that the effectiveness of general controls depend mainly on the reduced availability of loans. Another lesson is that it appears that higher interest costs to borrowers are not a major influence in restricting loans. It was also learned that the effects of credit restriction are not easily measurable.

This work deals with two methodologies for predicting incurred but not reported (IBNR) actuarial reserves. The first is the traditional chain ladder, which is extended for dealing with the calendar year IBNR reserve. The second is based on heteroscedastic regression models suitable to deal with the tail effect of the runoff triangle – and to forecast calendar year IBNR reserves as well. Theoretical results regarding closed expressions for IBNR predictors and mean squared errors are established – for the case of the second methodology, a Monte Carlo study is designed and implemented for accessing finite sample performances of feasible mean squared error formulae. Finally, the methods are implemented with two real data sets. The main conclusions: (i) considering tail effects does not imply theoretical and/or computational problems; and (ii) both methodologies are interesting to design softwares for IBNR reserve prediction. [ABSTRACT FROM AUTHOR]

By their operations variety, insurance companies are faced with a large amount of data, taking into account that an insurance type allows to cover several risks types. Also, the same risk type can be the subject to several insurance types. The risk notion is specific to the insurance domain and the insurance risk significances are varied. Ontology is a formal, explicit specification of the terms and defines a common vocabulary for researchers who need to communicate information in a certain field. This paper aims to create an OWL ontology for modelling the activity of an insurance company, providing a solid basis to apply knowledge in the general insurances domain, by defining a set of representation terms for risks, in order for the big insurance companies to discover new information relating to the interaction between risks, to form an overview of the external and internal risk factors to which an insurer is subjected to. [ABSTRACT FROM AUTHOR]

This paper studies reaching for yield-investors' propensity to buy riskier assets to achieve higher yields-in the corporate bond market. We show that insurance companies reach for yield in choosing their investments. Consistent with lower rated bonds bearing higher capital requirements, insurance firms prefer to hold higher rated bonds. However, conditional on credit ratings, insurance portfolios are systematically biased toward higher yield, higher CDS bonds. This behavior is related to the business cycle being most pronounced during economic expansions. It is also characteristic of firms with poor corporate governance and for which the regulatory capital requirement is more binding. [ABSTRACT FROM AUTHOR]

Performance is viewed as the implementation of an action or one's ability. Good performance is also related with achieving employees' efficiency and effectiveness. This study is qualitative in nature. The main aim of this study is to examine and compare the demographic and work related factors that influence employees' work performance in an insurance company situated in Bangladesh. For this purpose, 17 agencies of MetlifeAlico were contacted and studied. A sample of 100 of male and female employees responded properly among 120 respondents. The data have been analyzed by using SPSS software and a correlation analysis was done to see whether there were relationships between predictor variables and work performance. Chisquare test was applied to interpret the findings of study. A model has been developed in order to explain the relationship among demographic and work related factors and employees' work performance in this study. The results revealed that there is a positive and strong significant influence of rewards & promotion along with work &work environment (work related factors) on employees' work performance. [ABSTRACT FROM AUTHOR]

Insurance companies are such financial institutions which stand by us at our disastrous moments and try to uphold us by providing a lump sum amount of claim. To accelerate this important role in the economy, insurance companies involve in different investments so that they can earn a good profit. This paper analyzes the performance of a general insurance company named karnaphuli insurance company of Bangladesh. This study identifies the performance of karnaphuli insurance company along with the relationship among different performance indicators. Bankruptcy risk through SPRINGATEz score, business and financial risk are also analyzed. This analysis concludes that this insurance company is closing towards bankruptcy and business risk is gradually increasing as company's net income, policy sales growth, claim ratio are in decreasing trend. So company's performance overall is becoming poor. [ABSTRACT FROM AUTHOR]

The JOBS Act accomplished what many thought to be inconceivable. After being excluded from the privilege of advertising for eight decades, Congress has finally lifted the solicitation ban for emerging companies, hedge funds, and various other private vehicles. With respect to the hedge fund industry, which is the primary focus of this article, there have been numerous discussions among commentators regarding the anticipated effects of this law. These discussions range from measuring the extent to which the JOBS Act will facilitate capital formation, to whether it will undermine this goal by leading to an influx of fraudulent investment schemes. In contrast, this Article focuses on the anticipated effects that advertising will have on hedge fund investors, which can include wealthy individuals, pension plans, insurance companies, banks, and various other classes of institutions. This Article argues that advertising could actually enhance investor protection for this subset of investors as it will likely improve transparency, promote healthy competition, and, in some cases, make it more difficult for fraudulent advisers to induce prospective investors. And while the removal of the solicitation ban is generally a step in the right direction for hedge fund investors, this Article concludes with a brief discussion of the regulatory challenges that still remain and an explanation of why these hurdles may be exacerbated with the removal of the ban. Such challenges include the inherent conflicts of interest and the lack of standardization with respect to hedge fund valuations, the fraud loophole created by smaller funds that escape oversight under the Advisers Act, and the potential increase in speculation that could significantly compromise investor confidence. [ABSTRACT FROM AUTHOR]

Life insurance is the most common type of insurance in the world, mainly because of its benefit for both the individual and the state in general. As specific financial services that best combines the protection of the interest of the insured and his family members with appropriate elemental savings, life insurance through accumulation and investment of significant financial funds, positively effects on the economy as a whole. Accordingly, the subject to survey represents the life insurance with special emphasis on domicile insurance sector, through analysis of the types of life insurance, the current situation and perspectives for development, and insurance products in the field of life insurance through the prism of insurance companies that have a seat in the Republic of Macedonia. These paper consists of four (4) parts, including: 1. Introduction - Definition and types of life insurance; 2. Legal and institutional framework for life insurance in the Republic of Macedonia; 3. Life insurance market in the Republic of Macedonia; and 4. Conclusion - The future of life insurance in the Republic of Macedonia. In the first part: "Introduction", we define and explain the concept of life insurance, we highlight certain types of life insurance, as well as the advantages and disadvantages of this type of insurance. In the second part: "Legal and institutional framework for life insurance in the Republic of Macedonia", we analyze legal acts within which this insurance is included in the Republic of Macedonia, and we point out the institutions that make up this sector in our country. In the third part: "Life insurance market in the Republic of Macedonia", we analyze, in detail, the situation of the insurance market in our country, and we analyze the companies that offer life insurance. Finally, the "Conclusion" provides recommendations for the future developments of life insurance in the Republic of Macedonia, and we also give our basic conclusions that arise from our paper. If we want to achieve a higher degree of development of an economy, it is necessary to develop life insurance. The state must stimulate life insurance, through various incentives for its implementation (exemption from taxes, fees, etc.), and on the other hand with special protection of the insured. [ABSTRACT FROM AUTHOR]

The article deals with work-related stress, the reasons for its occurrence, consequences, and ways how to manage stress in the Lithuanian "X" life insurance company. The intermediaries' work stress connection with labour productivity and type A personality behaviour are analyzed. The study aims to find out how the insurance company takes certain measures to minimize work-related stress and to increase labour productivity. [ABSTRACT FROM AUTHOR]

Copyright of Econometrics / Ekonometria is the property of Sciendo and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this paper, we study the upper bounds for ruin probabilities of an insurance company which invests its wealth in a stock and a bond. We assume that the interest rate of the bond is stochastic and it is described by a Cox-Ingersoll-Ross (CIR) model. For the stock price process, we consider both the case of constant volatility (driven by an O-U process) and the case of stochastic volatility (driven by a CIR model). In each case, under certain conditions, we obtain the minimal upper bound for ruin probability as well as the corresponding optimal investment strategy by a pure probabilistic method. [ABSTRACT FROM AUTHOR]

An interview with Jacki Johnson, chief executive officer (CEO) of IAG New Zealand Ltd. in New Zealand is presented. When asked about the differences in the industry in New Zealand compared to that of Australia's, she commented on product mix and the structure of the market. Johnson cited many difference as well similarities between the insurance companies of Australia and those at New Zealand. She believes that the reinsurance capacity is a pronounced challenge in New Zealand.

A period of protracted low interest rates is a feasible, even if not the most likely, scenario going forward and such a scenario would adversely affect pension funds and insurance companies. Protracted low interest rates affect investment opportunities and have a potentially significant adverse effect on life insurance companies and institutions whose liabilities consist of a fixed investment return or benefit promises, such as is the case for defined-benefit pension funds. It cannot be ruled out that the financial institutions affected engage in "gambling for redemption" in an attempt to match the level of return promised to beneficiaries when financial markets were more elevated. [ABSTRACT FROM AUTHOR]

The fuzzy capital asset pricing model (CAPM) and fuzzy insurance capital asset pricing model (ICAPM) are used to investigate the underwriting systematic risk (βu) and underwriting profit margin (UPM) in the coverage of automobiles and aviation. Results show that the best-fitting parameter of skew factor is asymmetric. There is a positive relationship between the return rate of underwriting and market in the fuzzy CAPM, fuzzy ICAPM, and crisp environment. From the risk map point of view, the values of βu of automobile damage with high loss frequency and low loss severity are larger than those in aviation loss with low loss frequency and high loss severity, and have below-normal market risk. The value of the coefficient of variation of UPM in the aviation line is larger than in the automobile line. Our calculations show that the variation of UPM from the fuzzy ICAPM is more suitable for forecasting the insurance financial data and the difference of loss types in insurance lines than the fuzzy CAPM. [ABSTRACT FROM AUTHOR]

The prediction of an adequate amount of claim reserves is of the greatest importance to face the responsibilities assumed by an insurance company. Although many different deterministic and stochastic methods based on statistical analyses are used for claims analysis, presence of many internal and external factors that increase the uncertainty in insurance environment may lead to considerable loss in reliability of statistical methods. Therefore, in a state of uncertainty that exist in the nature of many actuarial and financial problems, when convenient and reliable data is not held, the use of fuzzy set theory becomes very attractive to get more actual results. In this paper, a method for calculating insurance claim reserves using hybrid fuzzy least-squares regression analysis is proposed. The results from classical method and this soft computing approach are compared by using original data in automobile liability insurance. [ABSTRACT FROM AUTHOR]

Copyright of Business Consultant / Poslovni Konsultant is the property of FINconsult Ltd. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this paper, we study the ruin theory for classical risk process that is perturbed by diffusion with risky investments. We obtain the upper bound for the minimal ruin probability. We also investigate the relationships between the adjustment coefficient and the diffusion volatility parameter, the risk-free rate and the correlation coefficient by numerical calculation. We give the relationships between ruin and investment. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

We present the first step in a program to develop a comprehensive, unified equilibrium theory of asset and liability pricing. We give a mathematical frame- work for pricing insurance products in a multiperiod financial market. This framework reflects classical economic principles (like utility maximization) and generates pricing algorithms for non-hedgeable insurance risks. [ABSTRACT FROM AUTHOR]

We study the continuous-time portfolio optimization problem of an insurer. The wealth of the insurer is given by a classical risk process plus gains from trading in a risky asset, modelled by a geometric Brownian motion. The insurer is not only interested in maximizing the expected utility of wealth but is also concerned about the ruin probability. We thus investigate the problem of optimizing the expected utility for a bounded ruin probability. The corresponding optimal strategy in various special classes of possible investment strategies will be calculated. For means of comparison we also calculate the related mean- variance optimal strategies. [ABSTRACT FROM AUTHOR]

This article examines some of the reasons why banks and insurance companies have been accused of discrimination, and shows that this is by and large a false accusation. Economic analysis demonstrates that racial discrimination is not a profit-maximizing strategy. Actually, unwise public policies are actually precluding many consumers from the market. [ABSTRACT FROM AUTHOR]

Mezzanine lending, financing that fills the gap between first mortgage financing and the total cost of the subject property, has become a major source of financing in commercial lending transactions. Designed to resolve issues arising from the increasing reluctance of first mortgage lenders to permit subordinate financing, mezzanine financing substitutes a senior equity interest for a second mortgage. This Article explores the issues surrounding the issuance of title and UCC insurance policies for the protection of mezzanine lenders. The authors also have provided a number of forms for use in conjunction with mezzanine financing transactions. [ABSTRACT FROM AUTHOR]

We obtain an estimate for the ruin probability of an insurance company that invests a part of its capital in stocks and puts the rest of the capital in a bank account. An insurance premium is established depending on the capital of the insurance company. [ABSTRACT FROM AUTHOR]

The world's financial markets have exploded with new products and new techniques such as derivatives and securitizations, giving rise to huge new markets. The author reviews recent developments in insurance-linked securities (ILS), financial products that link insurance and reinsurance with these new markets. Pricing and availability problems after Hurricane Katrina have led to newer types of products making their way into these markets. While catastrophe bonds still make up a significant portion of ILS, the risk of not recovering reinsurance receivables, for instance, can now be transferred to the financial markets via credit derivatives. Catastrophe risk can also be packaged as a credit derivative. New participants, like hedge funds and specialized mutual funds, have also caused a revival of exchange-traded ILS. Trading in catastrophe futures and weather derivatives is thriving. Sidecars were revived. Contingent capital is readily available. New perils, combined with others, are being covered. Insurance and reinsurance companies can no longer treat these instruments as a matter of relative pricing between traditional products and ILS. After Katrina, access to multiple sources of capital has become an essential strategic objective.The Geneva Papers (2007) 32, 319–331. doi:10.1057/palgrave.gpp.2510134 [ABSTRACT FROM AUTHOR]

The convergence and interplay between the insurance sector and the capital markets is likely to increase as will the diversity of products the capital markets offer. The speed and depth of this increase will depend on the ability of the insurance sector to improve its data quality and its risk management practices, and the number and size of large losses in the next several years as the markets develop their knowledge. Ultimately, those insurers who have the best data collection and control will have a competitive edge in leveraging their own risk management franchises for stakeholders.The Geneva Papers (2007) 32, 42–45. doi:10.1057/palgrave.gpp.2510115 [ABSTRACT FROM AUTHOR]

This paper firstly reviews the recent robust market performance of insurance financings and insurance-linked securities, covering traditional senior and subordinated/hybrid debt, as well as real risk transfer transactions. Secondly, we detail the five main categories of insurance securitizations. They represent the key recent developments of insurance securitization, allowing issuers to use innovative capital markets solutions to achieve strategic and financial objectives through these various forms of securitization.The Geneva Papers (2007) 32, 46–57. doi:10.1057/palgrave.gpp.2510117 [ABSTRACT FROM AUTHOR]

The German insurance industry has dealt intensely with the creation of a new supervisory model for European insurance companies since 1997 and released the so-called GDV-model in 2002. At the end of 2005, a completely redesigned proposal for a Solvency II compatible standard approach was published. For this new release, the GDV worked together with the German supervisory authority (BaFin) and the Association of the German actuaries (DAV). The objective of this paper is to show the progress of the work aimed at developing this standard model. Market risk, credit risk, underwriting risk life and non-life and operational risk are included in the approach as CEIOPS proposed. The main focus is on modelling the market risk, especially the interest-rate risk. The paper wants to show how the ALM risk, which is quite important for the insurance industry, could be modulated in a simple but meaningful way with the help of a duration approach.The Geneva Papers (2007) 32, 133–150. doi:10.1057/palgrave.gpp.2510116 [ABSTRACT FROM AUTHOR]

Implementation of new technologies is a never-ending process that attempts to secure the best available tools to accomplish organizational goals. Previous studies on technology implementation discuss the technology adoption process and the multiple factors that are important for making this process successful. This study focuses on the adoption of web-based applications in the insurance industry. An in-depth investigation of relevant literature on the technology adoption process and data collected from insurance companies helped us identify the success factors for online insurance. Relevant factors include infrastructure flexibility, website availability, the degree of business integration, and company age. [ABSTRACT FROM AUTHOR]

This paper looks at all the European and international organizations that have an influence on insurance companies' regulatory environment.The Geneva Papers (2005) 30, 19–28. doi:10.1057/palgrave.gpp.2510014 [ABSTRACT FROM AUTHOR]

Previous studies of financial health of insurance companies are mainly focused on insurers operating in the United States and developed economies. This article focuses on the solvency of general (property-liability) and life insurance companies in Asia using firm data and macro data separately. It uses different classification methods to classify the financial status of both general and life insurance companies. With the exception of Japan, failures of insurers in Singapore, Malaysia, and Taiwan are nonexistent. We find that, first, the factors that significantly affect general insurers' financial health in Asian economies are firm size, investment performance, liquidity ratio, surplus growth, combined ratio, and operating margin. Second, the factors that significantly affect life insurers' financial health are firm size, change in asset mix, investment performance, and change in product mix, but the last three factors are more applicable to Japan. Third, the financial health of insurance companies in Singapore seems to be significantly weakened by the Asian Financial Crisis. As the insurance industry in different Asian economies is at different stages of development, they require different regulatory guidelines. [ABSTRACT FROM AUTHOR]

The article examines the interwar insurance company investment patterns and practices in Great Britain from 1922 to 1937 using both aggregate statistical data and evidence regarding individual companies. Insurance proved to be one of the most prosperous and stable sectors of the interwar economy. Insurance offices constituted Britain's most important group of institutional stock market investors, accounting for 74.4 per cent of all stock exchange securities held by the clearing banks, insurance companies, and building societies in 1938. The analysis reveals that there was a substantial shift in new investment from traditional insurance company securities to higher yielding assets, including ordinary shares. Changes in the insurance market also had a considerable impact on investment policy. The interwar years witnessed the emergence of a much more competitive business environment for insurance, the intensification of a trend that had already become evident prior to the First World War.

Focuses on the interest of insurance companies in the political dynamics of global warming. Increase in payouts by insurance companies for weather-related catastrophes such as hurricanes and floods; Description of the lobbying activity of insurers; Details on investment switching from fossil fuels to renewable energy.

Focuses on the consideration of automobile insurance as the modal property-liability in the U.S. Market share of private passenger automobile insurance; Consideration of the insurance as the canonical line of business; Premium volume of the insurance.

The article chronicles the introduction of electronic trading in UK-based life insurance companies. In order to facilitate the introduction of this innovation, a company was established to which this article gives the name Switchco. Switchco was supposed to act as a focal point and facilitator for the transition from paper-based transactions to an interorganizational electronic network. The article examines Switchco's development as a process of developing knowledge work and networking. Studying Switchco's evolution is compared with the study of power-knowledge relations.

This research Investigates the influence of home-country tax systems on foreign- owned property-liability insurance company investment strategies in the United States. Specifically, we compare the Investment strategies of foreign Insurers subject to home-country territorial and worldwide tax regimes. We predict that U.S. subsidiaries and branches of foreign Insurers domiciled in territorial tax countries will hold more U.S. tax-favored assets than their counterparts subject to a worldwide tax regime. We also predict that U.S. subsidiaries of foreign-owned insurers domiciled in worldwide tax counties will hold more U.S. tax-favored assets than branches of such companies. Consistent with our prediction, we find that worldwide branches Invest a significantly smaller proportion of their assets in U.S. tax-exempt bonds than do territorial Insurers (both branches and subsidiaries). However, we find no statistically significant difference in the investment practices of worldwide subsidiaries and territorial subsidiaries. These results indicate that tax deferral available to worldwide subsidiaries may be the equivalent of tax exemption for investments in U.S. tax-exempt bonds. The results contribute to a stream of research that investigates how alternative tax regimes affect direct foreign investment In the United States (e.g., Collins et S. 1995; Hines 1996, 1997; Scholes and Wolfson 1990). [ABSTRACT FROM AUTHOR]

The article studies the investment policies and practices of life insurance companies in Canada with regard to equity shares. The two major principles of life insurance companies concerning investment are permanence and security. The following aspects of life insurance investment are considered: investment in common stock; reasons for not attaining the maximum allowable percentage investment in common stock; impact of the regulation that allows averaging a drop in the market value of common stocks over a three-year period and availability of common stocks for investment. The article also examines the impact of common stock price declines on the solvency position of life insurance companies in the country.