II. Retell the text.

Insurance companies

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Insurance companies may be classified into two groups:

• Life insurance companies, which sell life insurance, annuities and pensions products.

• Non-life insurance, general, or property/casualty insurance companies, which sell other types of insurance

General insurance companies can be further divided into these sub categories:

• Standard lines

• Excess lines

In most countries, life and non-life insurance are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between two types of company is that life, annuity, and pension business is very long-term in nature – coverage for life-assurance or a pension can cover risks or many decades. By contrast, non-life insurance covers usually a shorter period, such as one year.

Standard line insurance companies usually charge lower premiums then excess line insurers and may sell directly to individual insureds. They are regulated by state laws, which include restrictions on rates and forms, and which aim to protect consumers and the public from unfair or abusive practices. These insurers also required to contribute to state guarantee funds, which are used to pay for losses if an insurer becomes insolvent.

Excess line insurance companies typically insure risks not covered by the standard lines insurance market, due to variety of reasons (e.g. new entity or an entity that doesn’t have an adequate loss history, an entity with unique risk characteristics, or an entity that has a loss history that doesn’t fit the underwriting requirements of the standard lines insurance market). They are typically referred to as non-admitted or unlicensed insurers. These companies have more flexibility and can react faster than standard line insurance companies because they are not required to file rates and forms. However, they still have substantial regulatory requirements placed upon them.

The financial stability and strength of an insurance company should be a major consideration when buying an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carriers is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage. A number of independent rating agencies provide information and rate the financial stability of insurance companies.

II. Retell the text.

International finance

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International finance (also referred to as international monetary economics or international macroeconomics) is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries. International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international trade.

Sometimes referred to as multinational finance, international finance is additionally concerned with matters of international financial management. Investors and multinational corporations must assess and manage international risks such as political risk and exchange rate risk, including transaction exposure, economic exposure, and translation exposure.

Some examples of key concepts within international finance are the Mundell-Fleming model, the optimum currency area theory, purchasing power parity, interest rate parity, and the international Fisher effect. Whereas the study of international trade makes use of mostly microeconomic concepts, international finance research investigates predominantly macroeconomic concepts.