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dc.contributor.authorSchlütter, Sebastianen_US
dc.contributor.authorGründl, Helmuten_US
dc.description.abstractThis paper compares the shareholder-value-maximizing capital structure and pricing policy of insurance groups against that of stand-alone insurers. Groups can utilise intra-group risk diversification by means of capital and risk transfer instruments. We show that using these instruments enables the group to offer insurance with less default risk and at lower premiums than is optimal for standalone insurers. We also take into account that shareholders of groups could find it more difficult to prevent inefficient overinvestment or cross-subsidisation, which we model by higher dead-weight costs of carrying capital. The tradeoff between risk diversification on the one hand and higher dead-weight costs on the other can result in group building being beneficial for shareholders but detrimental for policyholders.en_US
dc.publisherInternational Center for Insurance Regulation, House of Finance, Goethe University Frankfurt am Mainen_US
dc.relation.ispartofseriesICIR Working Paper Series 08/11en_US
dc.subject.keywordInsurance groupsen_US
dc.subject.keywordinsurer default risken_US
dc.subject.keywordinsurance pricingen_US
dc.subject.keywordconsumer protectionen_US
dc.subject.stwStrategische Gruppeen_US
dc.subject.stwBetriebliche Preispolitiken_US
dc.subject.stwShareholder Valueen_US
dc.subject.stwVersicherungstechnisches Risikoen_US
dc.titleWho benefits from building insurance groups? A welfare analysis of optimal group capital managementen_US
dc.typeWorking Paperen_US
Appears in Collections:ICIR Working Paper Series, International Center for Insurance Regulation, Universität Frankfurt

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