What Transaction Costs are Acceptable in Life Insurance Products from the Policyholders' Viewpoint?

Purpose - The purpose of this paper is to analyze what transaction costs are acceptable for customers in different investments. In this study, two life insurance contracts, a mutual fund and a risk-free investment, as alternative investment forms are considered. The first two products under scrutiny are a life insurance investment with a point-to-point capital guarantee and a participating contract with an annual interest rate guarantee and participation in the insurer's surplus. The policyholder assesses the various investment opportunities using different utility measures. For selected types of risk profiles, the utility position and the investor's preference for the various investments are assessed. Based on this analysis, the authors study which cost levels can make all of the products equally rewarding for the investor. Design/methodology/approach - The paper notes the risk-neutral valuation calibration using empirical data utility and performance measurement dynamics underlying: geometric Brownian motion numerical examples via Monte Carlo simulation. Findings - In the first step, the financial performance of the various saving opportunities under different assumptions of the investor's utility measurement is studied. In the second step, the authors calculate the level of transaction costs that are allowed in the various products to make all of the investment opportunities equally rewarding from the investor's point of view. A comparison of these results with transaction costs that are common in the market shows that insurance companies must be careful with respect to the level of transaction costs that they pass on to their customers to provide attractive payoff distributions. Originality/value - To the best of the authors' knowledge, their research question - i.e. which transaction costs for life insurance products would be acceptable from the customer's point of view - has not been studied in the above described context so far.

Change in individual growth rate and its link to gill-net fishing in two sympatric whitefish species

Size-selective fishing is expected to affect traits such as individual growth rate, but the relationship between the fishery-linked selection differentials and the corresponding phenotypic changes is not well understood. We analysed a 25-year monitoring survey of sympatric populations of the two Alpine whitefish Coregonus albellus and C. fatioi. We determined the fishing-induced selection differentials on growth rates, the actual change of growth rates over time, and potential indicators of reproductive strategies that may change over time. We found marked declines in adult growth rate and significant selection differentials that may partly explain the observed declines. However, when comparing the two sympatric species, the selection differentials on adult growth were stronger in C. albellus while the decline in adult growth rate seemed more pronounced in C. fatioi. Moreover, the selection differential on juvenile growth was significant in C. albellus but not in C. fatioi, while a significant reduction in juvenile growth over the last 25 years was only found in C. fatioi. Our results suggest that size-selective fishing affects the genetics for individual growth in these whitefish, and that the link between selection differentials and phenotypic changes is influenced by species-specific factors.