| Summary: | 碩士 === 淡江大學 === 保險學系保險經營碩士在職專班 === 97 === The working capital of a life insurance company mostly comes from the reserve accumulated by insurance premiums of applicants. In order to exercise the insurance contract without any problem, the way to run the reserve is strictly regulated and clearly restricted by the government to secure the policyholders’ benefit. As the working capital of insurance business belongs to a midterm or longterm ones, therefore, it is more suitable for insurance companies to conduct residential mortgage loan than banks whose working capital belong short term ones. Insurance companies, similar to banks conducting the lending business, have to comply with the basic credit policies of safety, liquidity, profitability and growth and comply with the 5P policies to decrease their credit risk under the regulations related to the insurance law.
The possible risks of residential mortgage loan are prepayment, default, mobility and interest rates; among those risks, the prepayment and default are the most critical risks affecting the return of insurance companies. This study conducts an empirical analysis based on the mortgage applicants’ dataset of one life insurance company during 2002 to 2008 in Taiwan to investigate the predictors of default and prepayment. The data is grouped into northern, eastern, southern and western areas. The selected explanation variables are educational level, marital status, annual income, age, gender, with/no guarantor, the structure of the collateral property, age of the collateral property, conditions of the collateral property, address of the collateral property, loan amount, loan year, the type of a loan, the type of interest rate, the current mortgage interest rates relative to the rate on an outstanding loan, loan to value ratio, and debt-to-income ratios.
While logistic regression method was used by most prior studies, this study uses probit regression method to analyze the factors of default and prepayment. To understand which factor is significantly related with default and prepayment, we try to establish the prediction models of default and prepayment in order to reduce the risk of residential mortgage loan for life insurance companies.
Since the market interest rate declines continually affected the profitability of mortgage loan, the insurance companies should upgrade the credit method and quality. It is necessary to adopt more useful and efficient mothod to reduce risk of the mortgage loan for life insurance companies reaching the purpose of safety and profitability of working capital.
|
|---|
