Multiple shadow insurance activities and life insurance policyholder protection
- Resource Type
- Authors
- Shi Chen; Wenyu Yao; Fu-Wei Huang
- Source
- Finance Research Letters. 38:101524
- Subject
- 050208 finance
Actuarial science
Life insurance
0502 economics and business
05 social sciences
Equity (finance)
Business
050207 economics
Finance
- Language
- ISSN
- 1544-6123
This paper develops a contingent claim model to evaluate the equity and liabilities of a life insurer who operates multiple shadow insurance activities specified as wealth management products and entrusted loans. We show that multiple shadow insurance operations by the insurer produce superior return performance and help policyholder protection. Increasing the guaranteed rate at an increased optimal margin contributes to insurance stability whereas increasing the participation rate at a decreased optimal margin adversely affects insurance stability.