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Unit 10: Financial Services
Custody services: Custody services and securities processing is a kind of 'back-office' Notes
administration for financial services. Assets under custody in the world was estimated to $65
trillion at the end of 2004.
Insurance Services
Insurance brokerage: Insurance brokers shop for insurance (generally corporate property and
casualty insurance) on behalf of customers. Recently a number of websites have been created to
give consumers basic price comparisons for services such as insurance, causing controversy
within the industry.
Insurance underwriting: Personal lines insurance underwriters actually underwrite insurance
for individuals, a service still offered primarily through agents, insurance brokers, and stock
brokers. Underwriters may also offer similar commercial lines of coverage for businesses.
Activities include insurance and annuities, life insurance, retirement insurance, health insurance,
and property & casualty insurance.
Reinsurance: Reinsurance is insurance sold to insurers themselves, to protect them from
catastrophic losses.
Other Financial Services
Intermediation or advisory services: These services involve stock brokers (private client services)
and discount brokers. Stock brokers assist investors in buying or selling shares.
Primarily internet-based companies are often referred to as discount brokerages, although
many now have branch offices to assist clients. These brokerages primarily target individual
investors. Full service and private client firms primarily assist execute trades and execute trades
for clients with large amounts of capital to invest, such as large companies, wealthy individuals,
and investment management funds.
Private equity: Private equity funds are typically closed-end funds, which usually take controlling
equity stakes in businesses that are either private, or taken private once acquired. Private equity
funds often use leveraged buyouts (LBOs) to acquire the firms in which they invest. The most
successful private equity funds can generate returns significantly higher than provided by the
equity markets.
Venture capital: Venture capital is a type of private equity capital typically provided by
professional, outside investors to new, high-potential-growth companies in the interest of taking
the company to an IPO or trade sale of the business.
Task List the main venture capitalists of India.
Angel investment: An angel investor or angel (known as a business angel or informal investor
in Europe), is an affluent individual who provides capital for a business start-up, usually in
exchange for convertible debt or ownership equity. A small but increasing number of angel
investors organize themselves into angel groups or angel networks to share research and pool
their investment capital.
Conglomerates: A financial services conglomerate is a financial services firm that is active in
more than one sector of the financial services market e.g. life insurance, general insurance,
health insurance, asset management, retail banking, wholesale banking, investment banking,
etc. A key rationale for the existence of such businesses is the existence of diversification benefits
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