Strengthening financial structure of life insurers: Setting up the regulations of subordinated debt and application of financial reinsurance
Date Issued
2006
Date
2006
Author(s)
Yeh, Chun-Hung
DOI
zh-TW
Abstract
This thesis intends to understand how to solve high cost of capital and low Risk-Based Capital by setting up the regulations of subordinated debt and application of financial reinsurance.
On the one hand, The results show that the proportion of subordinated debt to paid-in capital and risk based capital and the proportion of subordinated debt to policy reserve must not over certainly percentage. Besides, if life insurers issue subordinated debt abroad, supervisor should handle the subjects of restriction of overseas investment and the position of full hedge of foreign assets. On the contrary, if life insurers issue subordinated debt home, supervisor should improve return of domestic investment tools.
On the other hand, life insurers with good financial situation do not issue financial reinsurance because financial reinsurance just redistributes future cash flow and recognizes profit earlier on. For this reason, issuing financial reinsurance just has two purposes, tax-saving and strengthening financial structure. Life insurers which have stable financial report but they loss money every year can contract financial reinsurance to achieve tax-saving. However, lifer insurers with poor financial situation can issue financial reinsurance to strengthen financial structure but it is merely to alleviate the symptoms of an illness. Finding excellent managers and investment groups is the only way to reform financial failure.
Subjects
次順位
債財務再保險
RBC
subordinated debt
financial reinsurance
Type
thesis
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