Polaris Life Insurance Company: Corporate Governance
(4 pages of text)
The recently appointed commissioner of insurance for Arlandia, an emerging-market country, is determined to do everything possible to minimize insolvencies and their potential destabilizing effects on the country’s financial system. The commissioner has an urgent need to quickly get up to speed on the Polaris Life Insurance situation. The minister of finance has already fielded inquiries regarding the company’s soundness, and the Arlandia Insurance Authority’s on-site inspectors have expressed deep concern about the company’s investment portfolio. The commissioner now needs to brief the minister of finance about the situation, develop plans for how the insurance authority should proceed and consider recommending additional regulatory changes.
The case is intended for senior undergraduate and graduate students in business disciplines such as finance, and in law, public administration or public policy courses that deal with the regulation of private-sector institutions. The situation faced by the commissioner of insurance represents a disguised version of a comprehensive, real-life example of the financial condition of a life insurance company in an emerging-market country, including the many different practical challenges facing the country’s financial regulator. Students are expected to analyze data, consider alternatives, identify decision criteria and provide a solution and action plan. The theoretical concepts in the case focus on the following:
- The interpretation of financial statements.
- Ethical dilemmas.
- Risk assessment.
Finance and Insurance
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