Question
When the values of stocks and bonds fluctuate, they have an impact on the balance sheets of insurance companies. Why is that impact more likely
When the values of stocks and bonds fluctuate, they have an impact on the balance sheets of insurance companies. Why is that impact more likely to be a problem for life insurance companies than for property and casualty companies?
Property and casualty insurance companies have (Click to select)a differentthe same investment horizon compared to life insurance companies. Because property and casualty insurance companies are likely to have to make a large number of payments in the (Click to select)nearfar future, they invest primarily in (Click to select)short-termlong-term assets, like (Click to select)money market instrumentsstocks and bonds. Payments from life insurance companies occur in the (Click to select)farnear future, so they invest in (Click to select)short-termlong-term instruments, predominantly (Click to select)money market instrumentsstocks and bonds. Life insurance companies face the risk that they will have to sell (Click to select)money market instrumentsstocks and bonds when prices are low in order to pay policyholders claims.
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