volume 2, issue 4, P1003-1019 1996
DOI: 10.1017/s1357321700004815
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M.R. Hardy

Abstract: ABSTRACTIn this paper a stochastic model office offering UK-style life insurance contracts is used to demonstrate the effect on relative solvency of different investment and bonus strategies. Relative solvency is defined loosely as the probability that an individual insurer does not fall significantly out of line with the rest of the life insurance market, in terms of, for example, asset liability ratios, or payouts to with-profit policyholders. The model uses the Wilkie investment model, extended to incorpora…

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