Single Blog Title

This is a single blog caption

This is due to the attempt to obtain a higher income.

This is due to the attempt to obtain a higher income.

Funds raised (current receipt of insurance premiums, reserves of contributions and indemnities, precautionary fund).

When investing funds of an insurance company in Ukraine, they are guided by the Law of Ukraine “On Insurance”. According to Article 30 of this Law, “Insurance reserves must be placed taking into account security, profitability, liquidity and diversification.

The first principle of asset placement is the principle of security. Its effect fully applies to both assets covering insurance reserves and free assets. This principle provides for the most reliable placement of assets that ensures their return in full.

The second principle is the return on investment. According to him, assets must bring a constant and high enough income.

The third principle is the liquidity of deposits. The insurance company must at any time have at its disposal an amount of money that would ensure that the policyholders pay the amounts stipulated in the contract in a timely manner.

The fourth principle is the diversification of deposits. It serves to distribute investment risks among different types of deposits, which in turn ensures the financial stability of the investment portfolio of the insurer.

Taking into account the above and based on the Law of Ukraine “On Insurance” it is possible to determine the following areas of investment for insurance companies:

Bank deposits and deposits. Real Estate. Securities that provide income. Securities imitated by the state. Claims rights to reinsurers. Long-term investment loans.

According to the “Temporary Regulation on the Procedure for Forming and Placing Insurance Reserves”, the following assets are taken into account in limited amounts when determining the level of coverage (as a percentage of the amount of available technical reserves and 50% of the statutory fund):

1. Bank deposits not more than 30% in one bank.

2. Real estate not more than 10%.

3. Foreign currency in the form of payment documents and other securities not more than 40%, including:

shares that are not listed on the stock exchange – not more than 15, of which shares of one issuer not more than – 2%; shares listed on the stock exchange – not more than 5% of one issuer; bonds – no more than 5%.

4. Cash loans to legal entities and individuals – policyholders – not more than 30%, incl:

loans to legal entities are not secured by bank guarantees or guarantees of other insurers – not more than 5%, of which the amount of the loan to an individual borrower should not exceed 1%; loans to legal entities secured by bank guarantees or guarantees of other insurers should not exceed 5% to an individual borrower.

5. Claims to reinsurers – no more than 50% of the amount of insurance liabilities transferred to reinsurance.

As you can see, the above restrictions in the formation of the investment portfolio of the insurer are aimed primarily at diversifying the risk of loss of investment or loss from investment activities. In my opinion, this is a very correct decision in the conditions of economic instability in our country. However, in these limitations, I believe there are some drawbacks. For example, the real estate limit is 10%.

By allocating residential buildings as part of real estate and raising the limit, for example, to 30-40%, it would be possible to achieve significant capital raising in the field of housing construction, which is currently necessary and quite profitable. This form of investment (and construction in general) is the most attractive, especially for companies engaged in long-term insurance.

To raise the prestige and value of the national currency, it is also necessary to limit even more the volume of investments by insurers in foreign currency to 1-2%.

In Ukraine, due to the underdevelopment of some types of investments, the main income of Ukrainian insurance companies came from bank deposits (in 1994, 75%). The decline in interest rates on bank deposits prompted insurers to reorient their investment portfolios towards more profitable, but at the same time less liquid assets.

Only 5-10% of all assets were securities of banks and enterprises. This is primarily due to the uncertainty factor that dominates the economy.

Foreign experience in conducting investment activities by insurers. The experience of market economy countries is of great interest in the field of investment policy.

So in the UK, insurance companies do not usually keep more in current accounts than they need daily payments. However, due to the specifics of the insurance business, a situation may arise where the insurer will need funds immediately. Therefore, a certain part, on average 4 – 5% of all assets of the company engaged in life insurance and 10 – 13% of the assets of companies engaged in risky types of insurance are highly liquid short-term investments (deposits, certificates of deposit, treasury obligations), which is quickly turn into money.

Medium and long-term investments can be divided into the following groups: fixed income securities. stocks, real estate and mortgage.

Fixed income securities are a major investment in UK insurance companies. They are a reliable investment that provides a sustainable income and at the same time can be quickly implemented in the market.

At the same time, insurance companies invest in ordinary shares of companies and firms in various sectors of the economy. This is due to the attempt to obtain a higher income. Also, by owning shares in certain companies, insurance companies try to influence the industries in which they have their interests.

Real estate, as an object of investment, is very attractive for insurance companies because it reliably protects invested funds from inflation. However, this type of investment is very low liquidity and their implementation in a short time can be problematic for the investor.

Mortgage lending is very common in the UK. It is carried out in an amount not exceeding 2/3 of the amount that can be obtained from the sale of property. This type of investment is long-term and low liquidity.

Recently, such a type of investment as the purchase of works of art, antiques, various valuable collections is gaining popularity. This does not give a stable income, and income depends solely on rising prices for these items.

Conclusion. From the above it can be concluded that the most profitable and stable are investments in fixed-income securities issued by the government and local authorities. In Ukraine, until recently, bank deposits predominated, with a decrease in the bank interest rate, the emphasis shifted towards government securities.

In general, under certain conditions (completion of privatization, stabilization of the currency), promising areas of investment will be investments in shares of enterprises. For companies that provide long-term insurance, the way out could be to invest free funds in construction, including housing, this would provide an opportunity to protect the funds raised from inflation in the long run.


Blank AI Investment Management, K., Item 1995. Insurance portfolio, M., Somintek 1996. Kharchenko NV Investment activity of insurance companies. Finance of Ukraine 1996 No. 7.


Economic concepts of K. Marx and F. Engels 70-90’s pp. Abstract

Marx developed a model of expanded reproduction under socialism. He notes that at the first stage, this distribution will provide for the formation of a fund for the replacement of consumed means of production, a fund for the expansion of production (accumulation fund) and a reserve, or insurance, fund. Their formation is an economic necessity

After the publication of the first volume of “Capital” there was a need for further development of economic theory, its adaptation to the needs of the time. Arguing with economists, sociologists, revolutionaries, Marx and Engels comment on their theoretical generalizations, deepen the interpretation of some problems.

Continuing work on “Capital” 1871 p. Marx published the work “Civil War in France”, which summarizes the experience of the Paris Commune. He evaluates not only its revolutionary, but also its economic achievements and mistakes, determines the historical perspective of revolutionary transformations. Later, in the work “Nationalization of the Land” (1872), he defined his vision of the foundations of social relations of socialism.

In the Critique of the Gothic Program (1875), Karl Marx formulated his vision of the regularities of the development of the future communist society.

The doctrine of the essence of capitalist production, built on the exploitation of wage labor, was aimed at showing its historical futility. According to Marx, capitalism itself is preparing its demise and will be replaced by a different system based on public property. But Marx and Engels, although convinced of the inevitability of a revolutionary change in the existing system, did not abandon a well-founded theory of socialism.

Criticizing Proudhon, Marx concluded that any mode of production corresponds to its form of ownership, or rather, it determines the social order. Socialism, in his opinion, is completely incompatible with private property. In the first volume of Capital, Marx shows how, within the framework of capitalist production, the sprouts of social property mature – the process of socialization of labor as a result of its further division, concentration, and specialization takes place. On the other hand, there is a growing need for social property, which could help eliminate capitalist contradictions, the main of which is the contradiction between the social nature of labor and the capitalist form of appropriation of its results.

Public ownership of the means of production and planning are the two main features that will determine, according to Marx, the essence of future society. In “Nationalization of the Land” (1872) he wrote that property in a socialist society must have not a group but a national form, which will contribute to the national centralization of the means of production. Only then will it be able to become the national basis of society if it consists “of an association of free and equal producers who are engaged in social work according to a general and rational plan.”

In the Critique of the Gothic Program, Marx dwells in more detail on the characteristics of this society, based on the thesis of the decisive role of production in relation to distribution.