Assets of Life Insurance Companies What are the main assets of life insurance companies? Identify the...

Assets of Life Insurance Companies What are the main assets of life insurance companies? Identify the main categories. What is the main use of funds by life insurance companies?

Expert Solution

Answer:

Main Assets of Life Insurance companies are:

High grade corporate bonds, Treasury Bonds, Preferred stock, Common stock, Mutual fund, Mortgages, Real estates, Policy loans, Short term investments, Government securities, Contract loans, Derivatives.

The main categories of assets are:

Long Term Investment and Loan

Policy Loans

Short Term Investment and Loans

Main use of funds by Life Insurance Company:

Life Insurance companies assume and pool risks of policy holders and redistributes it to a larger portfolio. Asset Liability management is crucial for their strategy and operations. It uses funds in suitable mix of Long term investments /loans and short term investments in a risk efficient manner to earns returns as well as to meet its insurance obligation cash flows.

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