金融英语课件李丽 马跃ISBN 9787810788175 PPTchapter_4.pptVIP

Chapter 4 Nondepository Institutions Chapter 4 Nondepository Institutions Nondepository institutions generate funds from sources other than deposits but also play a major role in financial intermediation. There are five categories of nondepository institutions: 1. insurance companies; 2. pension funds; 3. finance companies; 4. mutual funds; 5. securities firms. 1. Insurance Companies Insurance companies are intermediaries whose primary function is to allow households and businesses to shed specific risks by buying contracts called insurance policies that pay cash compensation if certain specified events occur. Policies that cover accidents, theft, or fire are called property and casualty insurance. Policies that cover sickness or the inability to work are called health and disability insurance, and policies that cover death are called life insurance. Payments made to insurance companies for the insurance they provide are called premiums. Insurance companies receive premiums in exchange for insurance policies payable upon death, illness, or accidents and invest the proceeds received from selling insurance in stocks and bonds. Their overall performance is linked to the performance of the stocks and bonds in which they invest. Insurance companies commonly obtain reinsurance, which effectively allocates a portion of their return and risk to other insurance companies. It is similar to a commercial bank’s acting as the lending agent by allowing other banks to participate in the loan. A particular property and casualty insurance company may agree to insure a corporation but spreads the risk by inviting other insurance companies to participate. Reinsurance allows a company to write larger policies, because a portion of the risk involved will be assumed by other companies. 2. Pension Funds Like an insurance company, a pension fund offers people the