TY  - UNPD
A1  - Schlütter, Sebastian
A1  - Gründl, Helmut
T1  - Who benefits from building insurance groups? A welfare analysis based on optimal group risk management
N2  - This 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.
T3  - ICIR Working Paper Series - No. 8/11 
KW  - insurance groups
KW  - insurer default risk
KW  - insurance pricing
KW  - consumer protection
Y1  - 2011
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/77116
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-771162
PB  - International Center for Insurance Regulation
CY  - Frankfurt am Main
ER  -