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Insurance Companies in Emerging Markets

Author

Listed:
  • Janet Kong
  • Manmohan Singh

Abstract

This paper focuses on asset allocation decisions of life insurance companies in emerging markets. Mature market insurers allocate only a small fraction of their assets to emerging markets because of regulatory constraints, rating pressures, and currency risk. However, global insurers invest directly in emerging markets by setting up subsidiaries rather than through portfolio investment, and this trend is increasing. Local insurers largely remain captive investors of local instruments and provide stability to the domestic securities market. The regulatory regime and the liquidity and depth of local markets play an important role in asset allocation decisions of insurers. Insurance companies are increasingly adopting asset liability management and risk control measures. However, insufficiently developed local markets and regulatory interventions on the liabilities side often limit optimal asset allocation.

Suggested Citation

  • Janet Kong & Manmohan Singh, 2005. "Insurance Companies in Emerging Markets," IMF Working Papers 05/88, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:05/88
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=18111
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    References listed on IDEAS

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    1. Eric Briys & François de Varenne, 1996. "On the Risk of Life Insurance Liabilities: Debunking Some Common Pitfalls," Center for Financial Institutions Working Papers 96-29, Wharton School Center for Financial Institutions, University of Pennsylvania.
    2. David F. Babbel & Anthony M. Santomero, 1997. "Risk Management by Insurers: An Analysis of the Process," Center for Financial Institutions Working Papers 96-16, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. George A Mackenzie, 2002. "The Role of Private Sector Annuities Markets in an Individual Accounts Reform of a Public Pension Plan," IMF Working Papers 02/161, International Monetary Fund.
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    Citations

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    Cited by:

    1. Peter Haiss & Kjell Sümegi, 2008. "The relationship between insurance and economic growth in Europe: a theoretical and empirical analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(4), pages 405-431, September.
    2. Teresa Bianchi & Gernot Ebner & Raimund Korherr & Eva Ubl, 2011. "The Austrian Insurance Industry in CESEE: Risks and Opportunities from a Financial Stability Point of View," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 22, pages 88-106.

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