Rajat gupta
Ton up Member
Hi Everyone,
I have a question on shareholder's interest in bonus deferral under Addition to Benefits method.
If a proprietary company aims to enhance shareholder's transfers then it is better to minimize deferral because shareholder's expected rate of return>rate of return earned over undistributed surplus.
With a deferral of surplus, gains are maximized for a policyholder due to more investment freedom and less liabilities. Why gains to policyholder does not imply gains to shareholder in this case, considering shareholder receives his/her 10% in 90:10 policy?
Does it imply that in with-profits policies, shareholders never earns his expected rate of return and insurance companies (acting in the interest of shareholders) try to minimize (shareholders expected return - shareholders actual return)?
Regards,
Rajat
I have a question on shareholder's interest in bonus deferral under Addition to Benefits method.
If a proprietary company aims to enhance shareholder's transfers then it is better to minimize deferral because shareholder's expected rate of return>rate of return earned over undistributed surplus.
With a deferral of surplus, gains are maximized for a policyholder due to more investment freedom and less liabilities. Why gains to policyholder does not imply gains to shareholder in this case, considering shareholder receives his/her 10% in 90:10 policy?
Does it imply that in with-profits policies, shareholders never earns his expected rate of return and insurance companies (acting in the interest of shareholders) try to minimize (shareholders expected return - shareholders actual return)?
Regards,
Rajat