Capital Market Players: Insurance Company Executives
Category Overview
Insurance Executives
Insurance companies are sophisticated investors
Insurance companies in the United States, are regulated by the states, rather than by the federal government.
Investments are more closely controlled by state regulators than are the portfolios of mutual funds.
Portfolios of insurance companies are similar in that they are run by professionals with long-term goals.
Although the securities that may be included in their portfolios are subject to limitations, insurance executives have greater freedom to switch between asset classes than do mutual fund managers.
Insurers Invest For the Long-Term
Insurance executives are less likely to be paid the high salaries of open-end mutual fund executives, although they are as competent as the more marketing-oriented investment company managers.
Unlike mutual fund managers, insurance company executives can usually take a long-term view of their investment portfolios.
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Life insurance portfolio managers invest premiums for the long-term in anticipation of actuarial expectations of future liabilities.
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Unlike mutual fund managers, insurance executives have predictable long-term outflows to meet.
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Life insurance portfolio managers can take a longer-term view than managers of open-end mutual funds.
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Property and casualty insurers invest premiums in similar anticipation of liabilities, but for shorter periods and their risks may be more concentrated in the event of natural disasters.
Insurance executives are sophisticated investorsBecause insurance executives have greater freedom to make asset-allocation decisions, their portfolios reflect a longer-term view and consideration of intrinsic values of the various classes of assets, than the portfolios of investment companies.
