An Empirical Analysis of the Annuity Rate in Chile

Empirical analyses of annuities markets have been limited to a few developed countries and restricted by data limitations. Chile provides excellent conditions for research on annuities due to the depth of its market and the availability of data. The paper utilizes a panel of life insurance company d...

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Main Authors:	Rocha, Roberto, Morales, Marco, Thorburn, Craig
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Pension Funds Other Private Financial Institutions Institutional Investors G230 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160
Online Access:	http://hdl.handle.net/10986/4893

id	okr-10986-4893
recordtype	oai_dc
spelling	okr-10986-48932021-04-23T14:02:20Z An Empirical Analysis of the Annuity Rate in Chile Rocha, Roberto Morales, Marco Thorburn, Craig Pension Funds Other Private Financial Institutions Institutional Investors G230 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Empirical analyses of annuities markets have been limited to a few developed countries and restricted by data limitations. Chile provides excellent conditions for research on annuities due to the depth of its market and the availability of data. The paper utilizes a panel of life insurance company data to examine econometrically the main determinants of the annuity rate, defined as the internal rate of return on annuities. The results indicate that the annuity rate is determined by the risk-free interest rate, the share of privately issued higher yield securities in the portfolio of providers, as a proxy for the spread over the risk-free rate, the leverage of providers, the level of broker's commissions, the market share of individual providers, the level of the premium, and the degree of market competition. The results also show that efforts to improve market transparency produced structural shifts in the parameters of the annuity rate equation. The results are consistent with separate research on money's worth ratios, and indicate the need to develop appropriate financial instruments, allowing providers to hedge their risks while extracting higher returns, and also to ensure competition and transparency in annuities markets, in order to ensure good outcomes for annuitants. 2012-03-30T07:30:15Z 2012-03-30T07:30:15Z 2008 Journal Article Journal of Pension Economics and Finance 14747472 http://hdl.handle.net/10986/4893 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article Chile
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Pension Funds Other Private Financial Institutions Institutional Investors G230 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160
spellingShingle	Pension Funds Other Private Financial Institutions Institutional Investors G230 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Rocha, Roberto Morales, Marco Thorburn, Craig An Empirical Analysis of the Annuity Rate in Chile
geographic_facet	Chile
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	Empirical analyses of annuities markets have been limited to a few developed countries and restricted by data limitations. Chile provides excellent conditions for research on annuities due to the depth of its market and the availability of data. The paper utilizes a panel of life insurance company data to examine econometrically the main determinants of the annuity rate, defined as the internal rate of return on annuities. The results indicate that the annuity rate is determined by the risk-free interest rate, the share of privately issued higher yield securities in the portfolio of providers, as a proxy for the spread over the risk-free rate, the leverage of providers, the level of broker's commissions, the market share of individual providers, the level of the premium, and the degree of market competition. The results also show that efforts to improve market transparency produced structural shifts in the parameters of the annuity rate equation. The results are consistent with separate research on money's worth ratios, and indicate the need to develop appropriate financial instruments, allowing providers to hedge their risks while extracting higher returns, and also to ensure competition and transparency in annuities markets, in order to ensure good outcomes for annuitants.
format	Journal Article
author	Rocha, Roberto Morales, Marco Thorburn, Craig
author_facet	Rocha, Roberto Morales, Marco Thorburn, Craig
author_sort	Rocha, Roberto
title	An Empirical Analysis of the Annuity Rate in Chile
title_short	An Empirical Analysis of the Annuity Rate in Chile
title_full	An Empirical Analysis of the Annuity Rate in Chile
title_fullStr	An Empirical Analysis of the Annuity Rate in Chile
title_full_unstemmed	An Empirical Analysis of the Annuity Rate in Chile
title_sort	empirical analysis of the annuity rate in chile
publishDate	2012
url	http://hdl.handle.net/10986/4893
_version_	1764393137793400832

An Empirical Analysis of the Annuity Rate in Chile

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