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This thesis reviews some fundamental risk measurement and management concepts that insurance companies will face in the following years. The first chapter evaluates the theoretical and practical framework of the different approaches with respect to the determination of regulatory capital held by insurance companies. A critical assessment and substantial interpretation of these approaches is performed. Moreover, a number of new approaches is brought forward in order to add a more thorough and clear way of evaluating the level of the regulatory capital. Then, we provide evidence of the presence of the underwriting cycle in the UK. The underwriting cycle has been identified in a number of OECD and non-OECD countries and highlights the different stages and maturity of the insurance market. A number of reasons for the presence of this cycle is presented and evaluated in contrast with the reasons behind the underwriting cycle in other countries. The level of profitability of the insurance companies is used to determine the presence of the cycle. In the third chapter, profitability and cost of capital are connected with the credit rating assigned by credit agencies to insurance companies. The credit risk that insurance companies face is explained by the use of financial ratios that explicitly explain the particular credit rating. The credit rating is implicitly connected with the cost of capital, which in turn is explained by the level of the credit spread between the Treasury Yield and European bonds. Finally, securitisation as an alternative method of minimizing credit and market risk is analyzed. Different structures of securitised deals are presented and evaluated. The benefits of securitisation are presented in a systematic way.

A laboratory study of the factors of that influence the propensity of organisations to copy the strategic decisions of others, based around the BRANDMAPS simulation, investigated the effects of contingencies relating to the environment, the decision and the firm itself, in the absence of binding resource constraints and legal pressures. The proportion of isomorphic decisions diminished with industry age: isomorphic behaviour did not become institutionalised. It was positively associated with industry dynamism - isomorphism was possibly used for risk reduction. No association with industry concentration was found: field structuration did not affect isomorphic behaviour. Pressures to imitate their peers, as perceived by participants, appeared unrelated to firms' performance or socio-cultural characteristics other than team diversity. Isomorphic behaviour was unrelated to isomorphic pressures, suggesting that unconscious rationality in managerial behaviour. Knowledge of opponents' decisions was associated with isomorphic behaviour, indicating that isomorphism was not simply a response to the task environment. However, the association was positive for some decisions and negative for others, inconsistent with common explanations of isomorphism as deriving from a desire for legitimation. Rather, isomorphic behaviour results from managers making efficient use of available information on competitors' practices. Combinatorially complex bundles of decisions were not isomorphic between firms that had taken similar individual decisions. There was no evidence of an "iron cage" constraining them to become more similar. Isomorphism between firms is not necessarily linked to institutionalisation or stimulated by causes - notably legitimation - suggested by institutional theory. A model of isomorphic behaviour in firms is proposed, based on the perceived value of the practice being copied, the nature of the decision, contingent properties of the business environment and of the organisational field and the situation and internal properties of the firm. The implications for managerial praxis are explored.

Economic environments have an effect on both the growth and lapsation of life insurance business. This thesis is undertaken in order to seek evidence of the significance of and relationship between specific macroeconomic and demographic factors and the demand for and lapsation of life insurance in the context of Malaysia and the United States (US). A dynamic, general-to-specific (Gets) approach is adopted in order to analyse the data. The general model (GUM) is formulated as an ADL(l,l) model to be subject to simplification. PcGets, a computer automated software for econometric model selection, which is capable of implementing the reduction subject to retaining congruence, is used to facilitate the analysis. The major findings show that, for Malaysia, the demographic factor, the change in total fertility rate in the previous period (i.e. positive and significant), is a vitally important factor in connection with life insurance demand (measured by number, by amount and by premium). Income and stock market return are important factors affecting the consumers' ability to purchase life insurance (in terms of amount and premium). The savings deposit rate is found to be related significantly to new life insurance business (by amount and by premium) but savings deposits seem not to be a competing savings instrument to life insurance. The inflation rate appears not to be an important factor affecting new life insurance business (by amount and by premium) but a high insurance cost tends to discourage the purchasing of life insurance (by number, by amount and by premium). Meanwhile, for lapsation of life insurance, both the forfeiture and surrender rates appear to be affected by the emergency fund effect with respect to the performance of the stock market in the previous period. Only fixed deposit rate is found to have the intended (positive) interest rate effect on surrender rate. The policyholders tend to surrender their life policies in favour of other investments that promise a better value for money in order to preserve their purchasing power in an environment of rising inflation rate. When the costs of obtaining insurance protection become more expensive, the forfeiture rate tends to be lower. The demographic factors tend to have a lagged influence on both the forfeiture and surrender rates. On the other hand, for the comparative study of Malaysia and the US, broadly speaking, the inflation rate, crude death rate and total fertility rate are the three factors that appear to be associated significantly with life insurance business in force (measured by number and by amount) in both Malaysia and the US. The surrender rates in Malaysia and the US are affected by a completely different set of factors. The theSiS concludes with some suggestions for useful areas for future research.

This thesis investigates three aspects of Lebanese banking: Bank Perfonnance, Bank Capital and Bank Mergers. The first chapter tackles the issue of bank perfonnance, with focus on the differences between domestic and foreign banks. We study panel data of almost the entire population of Lebanese banks between 1993 and 2003 to analyse the (different) detenninants of domestic and foreign banks' profitability. Using the Fixed Effects Regression Model, we find that foreign banks are more profitable than domestic ones and factors that shape a domestic bank's profitability are different from those of a foreign bank, mainly the macroeconomic variables. Moreover, we find that subsidiaries of foreign banks perfonn better than domestic banks acquired by foreign banks. The second chapter tests the applicability of some bank capital theories. Specifically, the Too-Big-To-Fail, the signalling, and the cyclicality of bank capital theories. Besides, we test the importance of market capital requirements vs. regulatory capital requirements. We use a panel of data from almost all the population of commercial Lebanese banks between 1993 and 2003. We split the panel data "horizontally" (according to bank ownership) and "vertically" (by time), and fmd that the above mentioned theories are applicable in certain conditions and circumstance. The Too-BigTo- Fail hypothesis emerges with tighter capital requirements, foreign banks do not "signal" using their capital level and foreign bank capital is not cyclical, etc ... The third chapter deals with bank mergers in emerging markets. We are interested in: (1) finding the motives behind bank mergers, and (2) detecting the outcome of bank mergers. We study the merger experience in the Lebanese banking sector, which has witnessed a large number of bank mergers. We find that mergers in emerging markets are driven by the will of large healthy banks to acquire small underperfonning banks. Additionally, we find that the regulatory authorities play an important role in this process. Bank mergers do have a constructive effect on consolidated entities as there is an improvement in profitability and efficiency, but the credit risk deteriorates.

Achieving an adequate income in the old age to maintain the standard level of living after retirement has been a challenge to pension schemes for a long time. In fact, approaching this goal has led to a global pension crisis considering all the economic and demographic changes and the conflicting interests of employers and employees over time. This research aims to deriving different deterministic and stochastic dynamic pension funding models for defined benefit schemes within the mathematical framework of optimal control theory and dynamic programming. The practical implementation of these dynamic models into one of the largest Egyptian defined, benefit occupational pension schemes - as a case study - is a tool to examine how they act in the reality, and provide the management of the pension fund with a dynamic plan instead of the static ones that have been used in such a volatile market. Taking into consideration the optimal contribution rate of the mutual interests of both the employer and the employees by including a mixed middle term in the dynamic pension funding models. This represents both the contribution rate risk and the solvency risk and could provide a solution for one of the pension schemes problems.

Mergers and acquisitions represent a dynamic process of corporate culture and strategy. Empirical evidence indicates a high rate of failure of M&A's to create value for the shareholders of the firms. On the other hand, internal audit has evolved dramatically during the last years from its traditional role of control orientation to a more proactive, risk based and consultancy role. But despite this evolution, empirical evidence showed that internal audit function has no effective contribution during the M&A activity. This study analyzes the present level of involvement of internal audit function during the M&A activity and compare it with the preferred and ideal (normative) level. This comparison leads to the identification of possible gaps between these three different models. This gap analysis identifies the possible reasons of this low level of involvement, as well as, possible means and actions in order to participate more actively to the specialized M&A projects. Finally, we formulated and validated a best practices model of a more expanded level of internal audit involvement at the different stages of M&A's, as well as, a list of potential prerequisites and actions for this expansion.

This thesis aims to investigate the effect oflongevity risk in the context of life annuities. It develops different tools and frameworks to measure this risk as a step to facilitate the risk management oflongevity risk. Particular attention is directed to stochastic modelling which allows the uncertainty of future projections to be incorporated. Hence, simulation methods are used to consider the distribution of the annuity cost, as well as the more often quoted point estimates. A theoretical extension of the use of the entropy measure applied in population biology by Demetrius (1976) has been developed to measure the effect of a proportionate change in the force of mortality on the cost of life annuity. The properties of the corresponding entropy measure have been then investigated using the Gompertz and the Sithole et al (2000) mortality projection models. Numerical results suggest that, at very high or low levels of mortality, the effect of mortality changes on the value of life annuity is of reduced importance. A full Bayesian model has been developed which incorporates the estimation of the parameters of both the Sithole et al (2000) and the Lee - Carter (1992) mortality projection models within the simulation of the annuity cost. This has been extended to an environment in which the future rates of interest are stochastic. The effect of parameter uncertainty of the Sithole et al (2000) mortality projection model has been considered and shown to be less important than the associated model uncertainty.

The following work is an investigation into methods of Cluster Analysis and Ordination. The main objective of this thesis has been to investigate the capabilities of these methods for practical usage. An important subsidiary aim has been to collect together related work which has been carried out in many different areas - ecology, biology, archaeology, psychology, etc., - into one work. After a brief introduction to the general concepts of multivariate analysis in Section A of the thesis, Section B gives an introductory account of the methods of Clustering, Ordination and Seriation, putting them into the context of the by now better established multivariate techniques. Section C considers Cluster Analysis in depth, explaining and examining various methods reported in the literature, together with methods developed by the author. The suitability of the methods for practical use is discussed and, decision rules are set out for the choice of method to be used in any particular study, based on the results of extensive comparative tests of the methods. In Section D the various ordination methods are. considered, giving an, overall viere and relating the methods to each other. Particular emphasis is paid to the rather neglected metric methods. Section E, after a survey of published applications of the methods, suggests new areas where the methods previously discussed could be valuable aids for data investigation and problem solving. An Addenda is included which describes several operational research case studies using these methods. Computer programs are given for the most successful of the newly introduced cluster methods, and an extensive reference section is also included.

The thesis investigates dynamic modelling in the field of capital budgeting. The essence of the particular type of modelling concerned is to select for immediate investment projects that can either be carried out "now" or else postponed to a later date. If such projects are postponed then the costs associated with them are likely to be affected by various economic forces, notably technological change. An important investment problem that is characterised by such options 'is replacement investment. The importance is both empirical and methodological, accordingly much of the study is devoted to this problem.