Which of the following statements is (are)true concerning investments of property and casualty insurers and life insurers?
I.Property and casualty insurance companies place greater emphasis on liquidity than do life insurers.
II.Life insurance company investments are,on average,of longer duration than property and casualty insurance company investments.
A)I only
B)II only
C)both I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

Property and casualty insurers need to have more liquidity because they need to be able to pay out claims promptly. Life insurers, on the other hand, generally have longer investment horizons because they have longer-term liabilities. Therefore, statement I is true. Moreover, life insurers require their investments to be of longer duration due to longer policy maturities, while property and casualty insurers have shorter investment horizons. Therefore, statement II is also true.

Which of the Following Statements Is (Are)true Concerning Investments of Property