Summary |
The purpose of managing the insolvency risk of insurance companies is to facilitate the merger of economic and actuarial approaches to insurance finance and solvency. Actuaries tend to approach solvency research through detailed modeling of the stochastic processes underlying insurance transactions. Actuarial models typically do not give much attention to the role of markets in determining the prices of insurance policies and the value of insurance companies. This is the primary contribution of economic models, which view insurance policies as financial instruments valued by trades in efficient competitive markets. This volume is divided into two complementary parts-operational models and financial models of risk assessment.
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