【文章內(nèi)容簡介】 e mutuals. ? P/C insurance is a riskier business than life insurance – P/C claims are less predictable and inflation has a potent impact. ? Moreover, the P/C risk patterns appear to be changing. For example, there has been a rapid rise in product liability claims. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 29 PropertyCasualty (P/C) Insurance Companies Source: Board of Governors of the Federal Reserve System 17 ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 30 PropertyCasualty (P/C) Insurance Companies ? Like life insurance firms, P/C insurers plan to break even on their insurance product lines and earn most of their return from their investments. ? However, achieving the breakeven point is difficult. In fact, P/C insurers have experienced billions of dollars in underwriting losses in recent years. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 31 PropertyCasualty (P/C) Insurance Companies ? The earnings and sales revenue of the P/C insurance industry reflect the ups and downs of the business cycle. ? Moreover, inflation pushes up the cost of claims, while intense petition holds premium rates down. ? To improve their future situation, P/C insurers must bee more innovative in developing new services. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 32 Finance Companies ? Finance panies grant credit to businesses and consumers for a wide variety of purposes, including the purchase of business equipment, automobiles, vacations, and home appliances. ? As such, they are sometimes called department stores of consumer and business credit. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 33 Finance Companies ? Consumer finance panies make personal cash loans to individuals, such as home equity loans and loans to support the purchase of passenger cars and home appliances. ? Sales finance panies make indirect loans to consumers by purchasing installment paper from dealers selling consumer durables. ? Commercial finance panies focus mainly on extending credit to business firms. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 34 Finance Companies ? Finance panies are heavy users of debt in financing their operations. ? The lack of an extensive work of branch offices has put many finance panies at a disadvantage. ? The number of finance panies is on the decline, although their average size has grown considerably. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 35 Other Financial Institutions ? Security dealers “take a position of risk” in securities. They trade in securities with the expectation of earning a profitable spread. ? Investment bankers assist businesses and governments in issuing debt and stock. ? Venture capital firms provide longterm capital financing for new businesses and rapidly emerging panies. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 36 Other Financial Institutions ? Mortgage banks work with other businesses on real estate development projects and sell the resulting loan instruments to other investors. ? Real estate investment trusts (REITs) fund mercial and residential real estate projects. ? Leasing panies purchase business equipment and other assets and then lease them in return for rental fees. ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 37 Trends Affecting All Financial Institutions Today ? There are several major trends affecting virtually all financial institutions today: ? increasing cost pressures ? consolidation ? service diversification and homogenization ? convergence ? technological revolution ? global petition ? regulatory cooperation and harmonization ? deregulation ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 38 Money and Capital Markets in Cyberspace ? Mutual funds are discussed at and ? More information on pension funds can be found at and ? Websites for the insurance industry include and ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 39 Money and Capital Markets in Cyberspace ? Visit some finance panies and investment banks like and ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 40 Chapter Review ? Mutual Funds (Investment Companies) ? The Background of Investment Companies ? Tax Status of the Industry ? OpenEnd and ClosedEnd Investment Companies ? Goals and Earnings of Investment Companies ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 41 Chapter Review ? Pension Funds ? Growth of Pension Funds ? Investment Strategies of Pension Funds ? Pension Fund Assets ? Factors Affecting the Future Growth of Pension Funds ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McGraw Hill / Irwin 16 42 Chapter Review ? Life Insurance Companies ? The Insurance Principle ? Investments of Life Insurance Companies ? Sources of Life Insurance Company Funds ? Structure and Growth of the Life Insurance Industry ? New Services ? 2020 by The McGrawHill Companies, Inc. All rights reserved. McG