M.Sc Thesis

M.Sc StudentMualem Elinor
SubjectAdvantages in Merging Insurance Companies
DepartmentDepartment of Mathematics
Supervisor PROFESSOR EMERITUS Abraham Zaks


In this discussion we will focus on life insurance, where a person pays a fixed premium to the insurance company while he is alive and gets benefits from the company when he dies. The premium paid to the insurance company is made out of a net premium and a risk factor. The net premium involves the yield which we consider given, and the probability for life given in a life table. The risk premium covers the risk in various assurance plans, involved in the probability as given in the life table. We note that the larger the group of insured people is, the risk load is smaller. Therefore, when several insurance companies merge, there is an increase in the number of insured individuals, the risk load decreases and a profit is generated. It is natural to ask for the proper way to divide the profit among the insurance companies. The solution should be agreed upon all companies and considers factors that are commonly used as a ground for negotiation (such as size, profitability and more). In the course of this work we offer several methods for dividing the profit that is generated due to the merge, considering different fairness and actuarial factors in each solution, using tools from Game Theory such as: cooperative games, Shapley value and utility functions.