Putting money where the growth is

Article Abstract:

Several insurers are adopting various strategies to distribute excess capital toward a limited number of growth opportunities in an attempt to rescue companies from continuous financial deterioration. Many companies are returning excess capital, such as stock buybacks, to shareholders to enhance respectable operating returns and shareholder value while others have resorted to vaious forms of restructuring to boost capital efficiency in the face of competitive pressures. The insurance industry has also been caught in the merger boom as the formation of strategic alliances with other insurers has proved to increase market penetration

Insurance Agencies and Brokerages, Insurance agents, brokers, & service, Insurance Agents & Brokers, Insurance agents

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Financial model for optimal risk/return results

Article Abstract:

Insurance executives can use modern portfolio theory to determine the best product mix for reducing risk while maximizing reward. Insurers can determine how to allocate resources across a broad range of product classes, including auto insurance, medical malpractice, workers compensation, and other products. The model also guides executives in making decisions about how to invest assets across a range of coupons and maturities. An example of how this theory was applied to several portfolios is given.

Methods, Management, Portfolio management, Return on investment, Rate of return

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1993's premium growth improves expense ratios

Article Abstract:

The insurance industry's expense ratio decreased 0.3 points from 26.5% in 1992 to 26.2% in 1993. Expenses increased 4.3% and net premiums increased 5.7%. The improved expense ratio resulted from relatively large increases in expenses, especially for salaries and commissions. Salary expenses increased 13.6% in 1993, and commission expenses increased 6.7%. By comparison, expenses for equipment and automation increased 6%. Commissions account for over 40% of the insurance industry's total expenses.

Industry Overview

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