Strategic Portfolio Diversification for Health Insurance Companies: Leveraging Esg Investments and the Black-litterman Model
Year: 2024
Type: article
Abstract: Health insurance firms primarily provide financial protection to policyholders by covering medical costs and mitigating health risks. While these firms typically invest in low-risk government securities, regulations allow them to diversify into equities. This study proposes allocating 20% of their portfolio to ESG-compliant companies, which can offer stronger risk management and higher long-term returns. Using the Black-Litterman model, we evaluated 20 ESG leaders and created four portfolios to assess their suitability for risk-averse investors. Our findings suggest that integrating ESG equities into the investment strategy can enhance diversification and improve profitability while maintaining stability for insurance firms.
Authors: P. NITHYA C.D. NANDAKUMAR, A. SAIBULLA, M. PRIYA
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4404969450