Department of Finance
Date of this Version
1993
Document Type
Article
Citation
Journal of Actuarial Practice 1 (1993), pp. 27-47
Abstract
Management decisions of a mutual life company involving the amounts and relative proportions of participating (with profits) and nonparticipating (without profits) business and the level of expenses are examined in relation to their effect on participating policyholders' returns. A particular expense ratio is defined that plays a key role in a framework for making such decisions. The sensitivity of participating policy returns to changes in each factor are analyzed. Companies with expense ratios (as defined) of less than 2 are shown to prefer a different strategy from companies with higher ratios. There is an incomplete tendency for the ratio to stabilize either at unity or to tend to infinity. The practical implications and limitations of the approach are considered.
Included in
Accounting Commons, Business Administration, Management, and Operations Commons, Corporate Finance Commons, Finance and Financial Management Commons, Insurance Commons, Management Sciences and Quantitative Methods Commons
Comments
Copyright 1993 Absalom Press