Abstract

http://ssrn.com/abstract=759745
 
 

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The Uses and Abuses of Finite Risk Reinsurance


Christopher L. Culp


Compass Lexecon; Risk Management Consulting Services, Inc.; Johns Hopkins University - Institute for Applied Economics, Global Health, and Study of Business Enterprise; University of Bern - Institute for Financial Management

J.B. Heaton


Independent; Bartlit Beck Herman Palenchar & Scott LLP


Journal of Applied Corporate Finance, Vol. 17, No. 3, 2005

Abstract:     
Finite risk has become what derivatives were ten years ago - a hot button for controversy and the likely subject of investigations, litigation, and new regulations. Our objective is to provide a general introduction to finite risk (or just "finite," as it is known in the trade). We begin with a brief overview of the structured insurance market. Finite risk solutions are a part of that market. We then describe the kind of risk management problems that lend themselves to finite risk solutions. Next, we provide a more precise definition of finite risk, first by distinguishing its main features from those of traditional insurance and then by discussing the kinds of risks that companies can manage with finite risk. We also describe a number of specific finite products and illustrate their applications with brief case studies. Finally we explore the potential for abuse of finite risk programs and suggest some guiding principles to help firms steer clear of such abuses.

Number of Pages in PDF File: 45

Keywords: Structured finance, risk management, insurance, finite, financial reinsurance

JEL Classification: G18, G22, G32

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Date posted: July 27, 2005  

Suggested Citation

Culp, Christopher L. and Heaton, J.B., The Uses and Abuses of Finite Risk Reinsurance. Journal of Applied Corporate Finance, Vol. 17, No. 3, 2005. Available at SSRN: http://ssrn.com/abstract=759745

Contact Information

Christopher L. Culp
Compass Lexecon ( email )
332 South Michigan Avenue
Suite 1300
Chicago, IL 60604
United States
Risk Management Consulting Services, Inc. ( email )
25 E Superior St
#1806
Chicago, IL 60611
United States
HOME PAGE: http://www.rmcsinc.com
Johns Hopkins University - Institute for Applied Economics, Global Health, and Study of Business Enterprise ( email )
3400 N. Charles Street
Baltimore, MD 21218
United States
University of Bern - Institute for Financial Management ( email )
Engehaldenstrasse 4
Bern, CH-3012
Switzerland
HOME PAGE: http://cmslive3.unibe.ch/unibe/wiso/ifm/content/index_ger.html
J.B. Heaton (Contact Author)
Independent
No Address Available
Bartlit Beck Herman Palenchar & Scott LLP ( email )
Courthouse Place
54 West Hubbard Street
Chicago, IL 60610
United States
312-494-4425 (Phone)
312-494-4440 (Fax)
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