Chapter12NonbankFinance1Chapter12NonbankFinance112.1InsuranceCompanies12.1.1LifeInsuranceCompanies-Thefirstlifeinsurancecompanywasestablishedin1759andtherearecurrentlyabout1700companies.-Regulatedbystates,notfederalgovernment.-Holdilliquidlong-termassets-Poorreturnscausedinsurancedemand-Becamemanagersofpensionfunds212.1InsuranceCompanies12.1.112.1.2Property&CasualtyInsuranceCompanies-Regulatedbystates-Holdmoreliquidassets-Insureagainstlossesfromalmostanytypeofevent.Ifapossiblelossistoolarge,severalfirmsmayjointogethertowriteapolicyorreducetheirriskbyobtainingreinsurance.312.1.2Property&CasualtyInsTable1RelativeSharesofTotalFinancialIntermediaryAssets,1970–2008(percent)4Table1RelativeSharesofToInsuranceManagement

Screening:Trytoscreenoutgoodinsurancerisksfrompoorones.2. Risk-basedpremiums:Charginginsurancepremiumsonthebasisofhowmuchriskapolicyholderposesfortheinsuranceprovider.3. Restrictiveprovisions:discouragepolicyholdersfromengaginginriskyactivitiesthatmakeaninsuranceclaimmorelikely.4. Preventionoffraud:Conductinvestigationstopreventfraudsothatonlypolicyholderswithvalidclaimsreceivecompensation.5InsuranceManagement

Screening5. Cancellationofinsurance:Beingpreparedtocancelpolicies.6. Deductibles:isthefixedamountbywhichtheinsured’slossisreducedwhenaclaimispaidoff.7. Coinsurance:Apolicyholdersharesapercentageofthelossesalongwiththeinsurer.8. Limitsonamountsofinsurance65. Cancellationofinsurance:

12.2PensionFundsPensionfunsprovidethepublicwithanotherkindofprotection:regularincomepaymentsduringretirement.1. Rapidgrowth:encouragedbytaxpolicy2. Biggerroleinstockmarket3. Problemofunderfunding4. PrivatePensionPlans:administeredbyabank,alifeinsurancecompany,orapensionfundmanager.5. PublicPensionPlansSocialSecurity:coversvirtuallyallindividualsemployedintheprivatesector.

712.2PensionFundsPensionfun12.3FinanceCompaniesBorrowinlargeamountsbutoftenlendinsmallamounts.1. Minimalregulationbystates2. Rapidgrowth3. Threetypes:SalesfinancecompaniesOwnedbyaretailingormanufacturingcompanyandmakeloanstoconsumerstopurchaseitemsfromthatcompany.812.3FinanceCompaniesBorrowiConsumerfinancecompaniesMakeloanstoconsumerstobuyparticularitemsortohelprefinancesmalldebts.BusinessfinancecompaniesProvidespecializedformsofcredittobusinessesbymakingloansandpurchasingaccountsreceivableatadiscount.9Consumerfinancecompanies912.4MutualFunds

Pooltheresourcesofmanysmallinvestorsbysellingsharesandusingtheproceedstobuysecurities.Advantage:-Lowertransactioncostsinpurchasingsecurities-Reducingtheriskbydiversifying1012.4MutualFunds

PooltheresLargeincreaseinthemarketsharesince1980.Primarilyheldbyhouseholds.Andbecomeincreasinglyimportantinhouseholdsavings.Institutionalinvestors(mutualfundsandpensionfunds)controlmorethan50%oftheoutstandingstockintheU.S.Open-endvs.closed-endOpen-endfund:sharescanberedeemedatanytimeatpricethatistiedtotheassetvalueofthefund.Closed-endfund:afixednumberofnonredeemablesharesaresoldataninitialofferingandarethentradedlikeacommonstock.11Largeincreaseinthemarkets5.Loadvs.no-loadLoadfunds:commissionispaidatthetimeofpurchase.No-loadfunds:solddirectlytothepublicwithnosalescommissions.Themanagersearntheirlivingfrommanagementfees,whichamountstoapproximately0.5%oftheassetvalueofthefundperyear.6.RegulatedbySEC125.Loadvs.no-load127.MoneymarketmutualfundsInvestsinmoneymarketinstrumentsofveryhighquality.Effectivelyfunctionascheckabledepositsthatearnmarketinterestratesonshort-termdebtsecurities.Currentlyaccountforaroundone-thirdoftheassetvalueofallmutualfunds.8.HedgefundsDifferentfromtraditionalmutualfunds.Haveaminimuminvestmentrequirementbetween$10,000and$20million.Usuallyrequirethatinvestorscommittheirmoneyforlongperiodsoftimeandchargelargefeestoinvestors.Despitetheirname,thesefundscananddotakebigrisks,particularlyifithasleveragedupitspositions.137.Moneymarketmutualfunds1312.5GovernmentFinancialIntermediationFederalcreditagencies: FNMA,GNMA,FHLMC,FarmCreditSystem,SLMA Moralhazardproblemofgovernmentloanguarantees1412.5GovernmentFinancialInte12.6SecuritiesMarketInstitutionsAllareregulatedbySEC1.InvestmentbanksTheyassistinthesaleofsecurities.Advisethecorporationonwhetheritshouldissuebondsorstock.Asaunderwriter,theyguaranteethecorporationapriceonthesecuritiesandthensellthemtothepublic.1512.6SecuritiesMarketInstitu2011年度證券公司的投行業(yè)務排名表全行業(yè)共81家證券公司合計承銷股票和債券（下簡稱“股債”）1.3萬億元。中信證券為承銷總額最高的券商，平安證券則以承銷家數(shù)占全行業(yè)之首。同時行業(yè)分化依然顯著，列入統(tǒng)計口徑的81家券商中，中信證券一家的全年股債承銷額，就相當于排名后50家券商之總和。以股債承銷金額排名，中信證券的承銷金額高達1764.998億元，排名第一，平安證券及國信證券緊隨其后，但承銷額均不足千億。承銷股債家數(shù)排名，平安證券以全年60家列行業(yè)首位，中信證券和國信證券分列第二、第三位。以股票承銷金額排名，依然是中信證券遙遙領先，全年承銷金額711.85億元，遠超國信證券465.1萬元和平安證券的338.4萬元。以股票承銷家數(shù)排名，平安證券以1家的微弱優(yōu)勢領先于國信證券，全年承銷42家居首位，海通證券排名第三，全年承銷22家。相比2010年，曾是國內投行業(yè)“大佬級”券商的中國國際金融有限公司（中金公司），以及曾被喻為“2010年黑馬”的中銀國際出現(xiàn)了較大幅度的下滑。162011年度證券公司的投行業(yè)務排名表全行業(yè)共81家證券公司合2012年度證券公司總資產排名172012年度證券公司總資產排名17SecuritiesbrokersanddealersConducttradinginsecondarymarkets.Brokersactasagentsforinvestors,matchingbuyerswithsellerandarepaidbrok