Insurance Companies in Emerging Markets
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.
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- 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.
- 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.
- G. 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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