Schemas are a central concept in strategy and organization theory. Yet, despite the importance of schemas, little is known about how they emerge. Our in-depth historical analysis of how groups in the ...life insurance industry developed their schema for the computer from 1945—1975 addresses this gap. We identify three key processes—assimilation, deconstruction, and unitization—that collectively explain and resolve an inherent tension related to schema emergence: how to make the unfamiliar familiar but conceptually distinct. We also find that each process relates to analogical transfer, but in a more pluralistic and dynamic way than the existing literature describes. Broadly, these findings have important implications for organizational change and managerial cognition.
In this study, we examine the effects of the degree of CEO optimism on their risk-taking behaviors and on firm value and show that CEOs with low overconfidence tend to take on more risk (in terms of ...tail risk) and have a lower Tobin’s Q than companies whose CEOs have moderate or high overconfidence. To do so, we use a sample of life insurance companies divided into three subsamples, based on the degree of CEO overconfidence (OC): low OC, moderate OC, and high OC. Our additional analyses indicate that, before the 2008 global financial crisis, all three OC subsamples have a positive effect on Tobin’s Q from the net credit default swap (CDS) sell positions. But, after the financial crisis, all the three OC groups use CDS to reduce firms’ risk-taking behavior, rather than to increase firm value.
This study investigates the effects of releasing embedded value (EV) reports and EV report disclosure quality on life insurance companies' credit risks, using issuer credit rating and bond yield ...spread data from 2001 to 2010. Results show that releasing an EV report and EV report disclosure quality are both significantly and negatively associated with life insurance companies' credit risks. In addition, the CFO Forum (2004a, 2004b, European Embedded Value) significantly strengthens the negative effect of releasing an EV report on firm credit risk while the subprime crisis has the opposite effect in Europe. Finally, the results are robust to endogeneity issues and different model specifications of fixed effects.
У cmammi визначено конкуренты переваги та конкурентний потенщал компажй 3İ страхування життя (КСЖ). Зазначено, що страховий б'1знес e важливою частиною фшансово-кредитно! системи, i страховий ринок e ...¡деальним мюцем для розвитку uiei галузк Акцептовано увагу на тому, що ринок страхування життя в Укро'1'ж перебувае на emani формування. Сучасна нестабтьна сощально-економ'нна ситуащя, военна агреая рф та особливост'1 культурночсторичних традищй укратщв e основними перешкодами та проблемами для його розвитку. На основ! проведеного SWOT-ananisy зроблено висновок про ¡снування певнихпроблем у д'1яльност'1 КСЖ. Разом ¡з поширенням ceimoeuxтенденщй глобал'1зацнта зацнта ¡нтеграцп нац'юнальнихринюв, автоматизацп операщйних процеав, посиленням конкуренцп проявляются тенденцн, що e характерними особливостями укра/нського страхового ринку. Встановлено, що управлтня конкурентним потенщалом КСЖ залежить eid прийняття правильних управлмських р!шень nid час формування та використання його конкурентних переваг. Заходи представлен'! у вигляд'1 програмнощльових блоюв, що забезпечуватимуть основу для створення мехажзму управлмня конкурентним потенщалом КСЖ. KpiM того, кожен з блоюв можно розглядати як окрему тдсистему, яка складаеться з р1'зних компонент'^. Визначено складов! управляя конкурентним потенщалом КСЖ. Встановлено, що ощнка конкурентних переваг страховика та конкурентного потенщалу буде можливою лише за допомогою системно'! ощнки, яка мае ч'1тку базу порюняння. Ця ощнка повинна враховувати не лише ф'1нансовий аспект, але й результата управляя, ефективжсть використання маркетингових ¡нструмент'1в, яысть cmpaxoeoï послуги й обслуговування страхувальника. Представлено заходи щодо т'двищення щення конкурентного потенщалу cmpaxoeoï послуги. Зроблено висновок, що оджею з важливих умов ефективного управлыня конкурентоспроможж'стю компан'ш 3İ страхування життя e визначення конкурентних переваг та конкурентного потенщалу КСЖ, що у перспектив! дозволяв ощ'нити pieeHb конкурентоспроможност'1 cmpaxoeoï компанн та розробити певж заходи щодо тдлаштування nid потреби страхового ринку на ecix етапах операщйно'! д1яльност! та ланок управлмня для швидкого та оперативного реагування на зовжшж загрози.
We present and empirically implement a dynamic discrete choice model of life insurance decisions to assess the importance of various factors in explaining life insurance lapsation. We estimate a ...model using information on life insurance holdings from the Health and Retirement Study. Counterfactual simulations using the estimates of our model suggest that a large fraction of life insurance lapsations are driven by idiosyncratic shocks, uncorrelated with health, income, and bequest motives, particularly when policyholders are relatively young. As the remaining policyholders get older, however, the role of such independent and identically distributed (i.i.d.) shocks gets smaller, and more of their lapsation is driven by income, health, or bequest motive shocks. As anticipated, income and health shocks are relatively more important than bequest motive shocks in explaining lapsation when policyholders are young, with bequest motive shocks playing a more important role as we age.
Life insurance settlements, or life settlements, are life insurance policies owned by investor-beneficiaries on the lives of unrelated individuals. With life settlements, investors make substantial ...payments to the insured individuals upon purchasing such policies, pay any remaining premius, and collect the death benefits upon the demise of the insured individuals. Transactions involving life settlements seem poised to become a major source of profits for investment banks, comparable in dollar amount to subprime mortgages. With life settlements, the insured individuals suffer no immediate harm, and the sale of a policy an individual owns is permissible under current law. Nevertheless, moral questions can be posed about the social values expressed by these practices, the effect of these practices on the virtue of charity, and the overall loss of social utility that will result from life settlements. We consider life settlements from utilitarian and libertarian perspectives, and then consider the effects of life settlements on social values and on individual character. On balance, we favor legislative changes in insurance and tax laws to discourage life settlements, and argue that certain forms of life settlements should be banned outright.
In this paper, we study the pricing and hedging of typical life insurance liabilities for an insurance portfolio with dependent mortality risk by means of the well‐known risk‐minimization approach. ...As the insurance portfolio consists of individuals of different age cohorts in order to capture the cross‐generational dependency structure of the portfolio, we introduce affine models for the mortality intensities based on Gaussian random fields that deliver analytically tractable results. We also provide specific examples consistent with historical mortality data and correlation structures. Main novelties of this work are the explicit computations of risk‐minimizing strategies for life insurance liabilities written on an insurance portfolio composed of primary financial assets (a risky asset and a money market account) and a family of longevity bonds, and the simultaneous consideration of different age cohorts.
In this paper, we investigate an optimization problem for a wage earner seeking to maximize expected utilities until retirement by choosing optimal consumption, investment, and life insurance ...purchase strategies. The constant elasticity of variance (CEV) model is adopted to describe the price process of the risky asset. Additionally, we assume that the wage earner has time-inconsistent preferences. This makes the wage earner discount her payoff by a non-constant discount rate. Applying the dynamic programming principle, we have derived the Hamilton-Jacobi-Bellman (HJB) equation corresponding to the optimization problem. Furthermore, we present semi-analytical expressions for optimal strategies and value functions in three cases: the benchmark model with time-consistent preferences, the naive and sophisticated wage earners with time-inconsistent preferences. Finally, illustrations of the optimal solutions and some economic insights are provided in the numerical examples.
Risk measures play a vital role in many subfields of economics and finance. It has been proposed that risk measures could be analysed in relation to the performance of variables extracted from ...empirical real-world data. For example, risk measures may help inform effective monetary and fiscal policies and, therefore, the further development of pricing models for financial assets such as equities, bonds, currencies, and derivative securities.<false,>A Special Issue of “Risk Measures with Applications in Finance and Economics” will be devoted to advancements in the mathematical and statistical development of risk measures with applications in finance and economics. This Special Issue will bring together the theory, practice and real-world applications of risk measures. This book is a collection of papers published in the Special Issue of “Risk Measures with Applications in Finance and Economics” for Sustainability in 2018.
ABSTRACT
Fair value estimates from external third-party sources are generally considered more reliable than internal estimates based on managerial inputs. However, even externally sourced estimates ...are subject to managerial opportunism, because firms can switch from one external source to another. In the context of life insurance companies that mostly rely on external sources, we posit that such source switches could be driven by managerial incentive either to faithfully report fair values (objective valuation) or to inflate estimates to avoid OTTI (opinion shopping). Our results support both motives. In instances in which the two incentives yield conflicting predictions for source switching, we find the opinion-shopping motive dominates. We also find that switches that increase fair value estimates are associated with a reduced OTTI likelihood and magnitude, especially for high-impairment-risk securities. On balance, our evidence suggests that opportunism with respect to source switching can compromise the reliability of externally sourced fair value estimates.
Data Availability: Data are available from the public sources cited in the text.
JEL Classifications: G22; M41.
PDF
