Financing a new business
Generating more competitive returns
Greater leverage in investment
All of the above
Answer is Right!
Answer is Wrong!
The correct answer is D. All of the above.
An insurance company needs assets for a variety of reasons, including:
- To pay claims. When an insured event occurs, the insurance company must pay out the claim to the policyholder. This requires the company to have sufficient assets on hand to cover the cost of the claim.
- To generate investment income. Insurance companies invest their assets in a variety of securities, such as stocks, bonds, and real estate. This investment income helps to offset the costs of running the insurance company and to provide a return on investment for the company’s shareholders.
- To meet regulatory requirements. Insurance companies are subject to a variety of regulations, which require them to maintain certain levels of assets. These regulations are designed to protect policyholders in the event that an insurance company becomes insolvent.
In addition to these reasons, insurance companies may also need assets for other purposes, such as financing new business ventures or expanding their existing operations.