published_or_final_version / Statistics and Actuarial Science / Master / Master of Philosophy

Small and Medium enterprises (SMEs) play an important role as employers and in the economic growth of South Africa and in Africa as a whole. SMEs comprise over 90 percent of African business operations and contribute to over percent of African employment and GDP. SMEs sector has shown positive signs in South Africa, Mauritius and North Africa. SMEs constitute 95 percent of formal manufacturing activity in Nigeria. Senegal and Kenya have provided an environment which is conducive for SMEs (African Development Bank 2005). In August 2006, flood damage to small businesses and residential premises in the Nelson Mandela Metropolitan Area was estimated at R120million (SABC News 2006). The holding of an insurance cover by SMEs is crucial and beneficial to the economy and to the survival and success of the Small and Medium Enterprise sector. If a business has an insurance policy and a relationship with its insurer it becomes easier for the company to over come such a catastrophe. However, literature has shown that insurance companies are not willing to insure SMEs and it is the aim of this research to establish whether a relationship between the two constructs exists. An article entitled New Deal In The Offering for SMMEs, the author stated that the insurance industry prefer to deal only with established businesses (Mthimkhulu 2008). The aim of this research is to establish the importance of business relationship between Insurance companies and SMEs. The research will show how beneficial such a relationship is to both industries. The data for the research was collected through a survey type structured questionnaire that was developed and validated. The questionnaire was administered to the owners or managers of SMEs in the Nelson Mandela Metropolitan Area. The primary objective of this research was to establish whether SMEs in the Nelson Mandela Metropolitan Area have insurance policies for their businesses, and the results have shown that most of the SMEs in the Nelson Mandela Metropolitan Area do not have insurance policies for their businesses.

The key objective of insurance company on money management is asset liability management, as policy asset is solely for paying policy liability. It is true whether it is in case of life insurance, general insurance, or reinsurance. The difficulty of achieving such objective is that the exact cash flow and the exact duration of policy liability are unknown ex ante that requires the asset manager's a good quantitative, financial skill. What is worse is that the variations of cash flow and duration can be huge that is demanding on the asset manager's quantitative, financial skill. Quantitative problem is difficult but qualitative problem can be even more difficult. The specialist problem in insurance industry, which is also known as agency problem in information economics, is notorious. It is because a specialist may no longer work for the insurance company when the long term liability is due and the existing liability portfolio is always composed of myriad policies liability. / The purpose of this thesis is to try to provide solutions to three critical problems in insurance industry. (1) China is the most booming country for insurance at the moment. So, it is selected for discussing about the most difficult problem in modern finance---specialist problem. A structural approach is devised in this thesis to solve such problem. The solution can be generalized to all countries. (2) As many people argue about that modern finance is inapplicable to emerging market, such as China, especially when there are capital account and currency controls, the bond market of China is selected to provide evidence that modern finance is applicable to emerging market even both the capital account and the currency of the country are controlled by the government. (3) The last part of this thesis provides a breakthrough solution to price insurer default option, an embedded option, in insurance company using observable credit default swap price, as the traditional approach needs statistical assumption that is subjective. / Li, Wing Ping Desmond. / Adviser: Frank Youhua Chen. / Source: Dissertation Abstracts International, Volume: 70-06, Section: A, page: 2169. / Thesis (Ph.D.)--Chinese University of Hong Kong, 2008. / Includes bibliographical references (leaves 64-65). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. [Ann Arbor, MI] : ProQuest Information and Learning, [200-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. Ann Arbor, MI : ProQuest dissertations and theses, [201-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstracts in English and Chinese. / School code: 1307.