What is happening during a risk repricing?

July 7, 2024 No Comments

During a strong bull market, the market’s overall sense of optimism can often lead to poor estimates about the level of risk that an investment may possess. Unfortunately, once a market correction occurs, investors will often realize that they have been exposed to more risk

What are insurance sector companies usual profit margins?

July 7, 2024 No Comments

A: The insurance industry’s net margin in 2017 ranged between 3 and 10.5%. Life insurance had the widest range between quarters, from 3% to 9.6%; property and casualty insurance were at 3% to 8%; and health insurance had the narrowest range of 4% to 5.25%. The net margin for insurance brokerages

What is moral hazard?

July 7, 2024 No Comments

A: Moral hazard is idea that a party protected in some way from risk will act differently than if they didn’t have that protection. We encounter moral hazard every day—tenured professors becoming indifferent lecturers, people with theft insurance being less vigilant about where they park,

What are the benefits of high net worth insurance?

July 7, 2024 No Comments

A: High-net-worth individuals (HWNI) face unique insurance challenges and tend to gravitate towards different insurance products. Wealthy families have relatively more complicated risk management needs and relatively less obvious needs for catastrophic insurance coverage. The real risk might be overinsuring against minor threats and underinsuring

What is the average price-to-earnings ratio in the insurance sector?

July 7, 2024 No Comments

A: Insurance companies could be an attractive addition to an investment portfolio offering a good balance of capital appreciation and dividends. Similar to other financial services firms, valuing insurance companies poses difficulties to analysts due to small capital expenditures and depreciation that have little effect

What are the most effective ways to reduce moral hazard?

July 7, 2024 No Comments

A: There are a number of ways to reduce moral hazard, including the offering of incentives, policies to prevent immoral behavior and regular monitoring. Moral hazard, essentially, is risk taking. Generally, moral hazard occurs when one party or individual takes risks knowing that, if the

What is the average return on equity for a company in the financial services sector?

July 7, 2024 No Comments

A: Also known as return on net worth, a company’s return on equity (ROE) is a common metric used by investors to analyze profitability. Expressed as a percentage, ROE is calculated by dividing a company’s’ net income for the previous year by its shareholders’ equity.

What are the pros and cons of life insurance policy loans?

July 7, 2024 No Comments

A: Like with any type of loan, life insurance policy loans come with pros and cons. It is important to look at both aspects before deciding whether to borrow against your whole life insurance policy. Pros of a Life Insurance Policy Loan Getting a life insurance policy loan is

What is the average return on equity for a company in the insurance sector?

July 7, 2024 No Comments

A: The insurance sector offers an attractive investing opportunity for investors looking to diversify their portfolio with insurance companies that may offer appealing dividend yields. One way to assess an insurance company is to calculate its return on equity, which is one of the many

What are the tax implications of a life insurance policy loan?

July 7, 2024 No Comments

A: Taking out a loan against your life insurance policy does not count as taxable income, according to the IRS. However, if you surrender your policy or your policy lapses, the IRS is notified of this taxable event and you have to pay tax on

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