"Investment Risk and the Insurance Cycle"

Paper Summary:

This paper discusses how, in the article, "Investment Risk and the Insurance Cycle in the New Millennium", Charles Ruoff brings some very valid points regarding the insurance industry and investment risk to light. It looks at how the paper is valuable and valid as it points out the importance of investment diversification to eliminate unnecessary enterprise and asset risk. It further expands upon these concepts and ideas.

From the Paper:

"Mr. Ruoff points out in his article that there are many situations relative to the market and investing environment that directly affect the risk ratio for insurance companies. For example, he points out that during 1990 Executive Life Insurance Company "demonstrated the lack of liquidity in a portfolio dominated by junk bonds" (Ruoff, 2003). In the present market, as the article points out, the economy is faced with falling stock prices and default on bonds, which often result in insolvencies (Ruoff, 2003). The condition of the economy is constantly changing; as a result insurance companies need to be aware of market trends to make the most risk free decisions possible."

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