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Derivatives And Their Application To Insurance
A Retrospective And Prospective Overview
by Allan Hodgson
This paper provides a comprehensive overview of the application of derivative securities in the insurance industry. Insurance companies typically manage risk by implementing operating procedures, insurance pooling, and reinsurance. However, core business risk and financial market risk are not easily reduced by such standard procedures. Derivatives provide a cost effective vehicle to hedge financial market risk. At the same time, they are also used to raise capital, reduce taxes, smooth accounting earnings, and provide a valuation method for financial assets.
The full paper has been published in Adobe Acrobat format. If you already have Adobe Acrobat installed, click here to view the paper. (106Kb)
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