Search results

1 – 2 of 2
Per page
102050
Citations:
Loading...
Access Restricted. View access options
Article
Publication date: 1 April 2003

SNORRE LINDSET

In the past, life insurance companies were mainly exposed to mortality risk, a risk they in principle could diversify by issuing a large number of similar and statistically…

151

Abstract

In the past, life insurance companies were mainly exposed to mortality risk, a risk they in principle could diversify by issuing a large number of similar and statistically independent policies. However, as more exotic life insurance policies have been offered, such as unit‐linked life insurance contracts and policies with bonus mechanisms and minimum rate of return guarantees, life insurance companies have also become exposed to financial risk. The financial risk is non‐diver‐sifiable and is likely to affect many, if not most, of the companies outstanding policies in the same direction. Although it is non‐diversifiable, the financial risk is (at least to some extent) hedgeable. Since the accumulated exposure to financial risk over all the policies issued by a life insurance company can be large, it is important that this risk be hedged so that the company is able to meet its obligations to the policyholders.

Details

The Journal of Risk Finance, vol. 5 no. 1
Type: Research Article
ISSN: 1526-5943

Access Restricted. View access options
Article
Publication date: 1 June 2015

Svein Olav Krakstad and Are Oust

This paper aims to investigate whether the homes in the Norwegian capital, Oslo, are overpriced. While house prices in many countries dropped after the financial crisis, those in…

1135

Abstract

Purpose

This paper aims to investigate whether the homes in the Norwegian capital, Oslo, are overpriced. While house prices in many countries dropped after the financial crisis, those in Norway have continued to increase. Over the past 20 years, real house prices in Oslo have increased by around 7 per cent yearly.

Design/methodology/approach

The authors use a vector error correction model to estimate the equilibrium between house prices, rents, construction costs and wages to examine whether house prices in Oslo are overpriced.

Findings

Long-term relationships between house prices, rents, construction costs and wages are found and used to estimate equilibrium house prices in Oslo. The overpricing in Oslo compared to estimated equilibrium prices is around 35 per cent.

Practical implications

Price–rent, price–construction cost and price–income ratios are often used, by practitioners to say something about over- or underpricing in the housing market. We test and find that house prices, rents and construction costs move toward constant ratios in the long run, while wages are found to be weakly exogenous in the system.

Originality/value

Our estimate of overpricing gives households, investors and policy-makers a better understanding of the risk associated with owning dwellings.

Details

International Journal of Housing Markets and Analysis, vol. 8 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

1 – 2 of 2
Per page
102050