Question
SHOULD INSURANCE COMPANIES MAKE RISKY INVESTMENTS? Point No. Insurance companies can best serve their policyholders by maintaining adequate reserves in case claims are filed. If
SHOULD INSURANCE COMPANIES MAKE RISKY INVESTMENTS?
Point
No. Insurance companies can best serve their policyholders by maintaining adequate reserves in case claims are filed. If they make risky investments, they could experience liquidity problems and may not be able to serve their policyholders.
Counter-Point
Yes. Insurance companies can increase their return by investing in riskier securities, and this will enhance their profits and valuation, and their stock price (if they are publicly traded). In this way, the investment policy maximizes the value of an insurance company for its owners.
Who is correct?
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International Marketing And Export Management
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
8th Edition
1292016922, 978-1292016924
