Such activity can be a headwind for equities, as sellers of portfolio insurance hedge by shorting futures.
FORBES: May Options With Five-Week Expiration Cycle Could Create Headwinds
In October of 1987, the craziness was created on Wall Street-LBO deal mania, programmed trading and portfolio insurance nonsense.
Traders were using a new kind of hedging strategy called portfolio insurance, which involved linking stock prices to the futures index.
The second lesson of the 1987 crash relates to portfolio insurance, a practice pursued by many institutional investors at the time.
He holds another patent on a risk-reduced portfolio that would combine stock investments with portfolio insurance and such hedging techniques as collars.
The life insurance company utilizes all different methods of providing for the guarantees, such as portfolio insurance, derivatives, futures contracts, options, etc.
Historically, gold has offered sound portfolio insurance, and with the market shaping up for a dire year in 2012, a little insurance will go a long way.
Therefore, a risk to bulls is that hedged players find put premiums too expensive, and thus sharply reduce their equity accumulation due to the expensive portfolio insurance.
FORBES: Short-Sellers Could Take Market Lower In The Near Term
He compared the prospects to October 1987, when portfolio insurance, just "a bunch of stop-loss orders on a large-scale basis, " caused the market to plunge 23% in one day.
Our theory as to why this particular week has a negative bias is related to those looking to add portfolio insurance via the purchase of options on indexes and exchange-traded funds.
FORBES: May Options With Five-Week Expiration Cycle Could Create Headwinds
As you can see on the chart below, when the VIX is at a discount or is trading at a small premium to historical volatility implying cheap portfolio insurance major short-term buying opportunities have occurred during the past several months.
FORBES: Short-Sellers Could Take Market Lower In The Near Term
According to the ETF Finder at ETF Channel, GNW makes up 2.97% of the KBW Insurance Portfolio ETF ( AMEX: KBWI )which is trading up by about 0.4% on the day Thursday.
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According to the ETF Finder at ETF Channel, ALL makes up 4.98% of the Dynamic Insurance Portfolio ETF ( AMEX: PIC )which is trading lower by about 1.6% on the day Monday.
In 2005, Stewart Johnson, a portfolio manager at an insurance company in New York, and his wife were at their "absolute limit" with their then 14-year-old autistic son.
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Deutsch: AHL VereinslogoWith excellent underwriting results and solid investment portfolio returns , Aspen Insurance ( AHL), a property and casualty insurer and reinsurer has been consistently delivering positive earnings surprises.
Some planners, for example, will take you by the hand--put you on a budget, rejigger your portfolio, redo your insurance, plan your estate, set up the trusts and select the appropriate tax shelters.
Stable-value funds typically consist of a diversified bond portfolio combined with bank or insurance-company "wrap" contracts.
You can think of having a good portion of your portfolio in bonds as an insurance policy.
There is a difference between holding gold for price appreciation and holding it as an insurance policy or portfolio hedge.
The investment bankers knew overseas investors would shun a life insurance company with a portfolio of unprofitable policies.
The bank made a cash offer for the junk-bond portfolio and arranged for a new insurance company, Aurora, to take over Executive Life's insurance contracts.
If you believe housing has hit bottom, then the leading title-insurance provider belongs in your portfolio.
FORBES: One Rating Agency's Junk Bond Could Be Your High-Yield Treasure
At the end of the day, insurance companies invest in a bond portfolio, keep a large portion of the return and distribute the rest to the contract holder.
Think of those potentially redenominated Spanish bonds as toxic admixtures into bond portfolios all over the planet -- including possibly the bond portfolio that supports your pension or your life insurance claim.
Prosecutors allege that when the French bank bought a defunct California insurance company's junk bond portfolio in 1991, it was effectively taking control of the company with the help of clients and allies.
Fearing all markets could soon fall, El-Erian injected what he referred to as "Armageddon insurance" into HMC's portfolio for the first time by buying interest rate floors, or a wager that rates would fall, and betting, via credit default swaps, that companies could soon struggle to pay their debts.
The buyers of debt (portfolio managers of mutual funds, investment trusts, insurance companies, etc.) need to understand the risk of the bonds that they buy.
It would sell off most or all of its portfolio and invest the cash in financial services businesses--an insurance company, perhaps, or a fund management company.
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There is no magic that insurance companies can do to enhance long term returns on a bond portfolio, and given the costs involved most investors would be far better served to invest in a short-term, high quality bond index fund.
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