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- Title
OPTIMIZING THE STRUCTURE OF CAPITAL CLAIMS AND ASSETS OF A STOCK INSURANCE COMPANY: COMMENT.
- Authors
Scheel, William C.; Belth, Joseph M.; Rejda, George
- Abstract
This article presents a comment on a study which developed a theory of the firm for stock property-liability insurers. A recent article by Robert A. Haugen and Charles O. Kroncke (H-K) is a valuable contribution to the development of a theory of the firm for stock property-liability insurers. The purpose of this comment will be to question the propriety of several of their basic formulations as well as offer an alternative theory which purports to answer several questions. The H-K formulation attempts to cope with the problem of cash flow incidence for both the stream of costs associated with the insurance operations and the stream of investment returns derived from two sources of invest-design funds: premium receipts and equity. Their approach to the problem is to define an expected internal rate of cost on insurance and an expected internal rate of return on investment.
- Subjects
LIABILITY insurance; PROPERTY insurance; INSURANCE; HAUGEN, Robert A., 1942-2013; KRONCKE, Charles O.; STOCKS (Finance); INVESTMENTS
- Publication
Journal of Risk & Insurance, 1972, Vol 39, Issue 2, p305
- ISSN
0022-4367
- Publication type
Article
- DOI
10.2307/251898