Pablo Koch-Medina

Pablo Koch-Medina is Associate Professor of Finance and Insurance and Head of the Department of Banking and Finance at the University of Zurich. Professor Koch-Medina was responsible for launching the University's Center for Finance and Insurance, which bridges the gap between the two fields and helps advance research and foster education in the application of finance theory and mathematical finance in insurance-related topics. Prior to his academic appointment, he worked for more than 20 years in the finance and insurance industry.

Expertise

Professor Koch-Medina is studying the financing and investment decisions of value-maximizing insurance firms in an environment with a variety of financial frictions. Whether or not insurers should seek exposure to financial market risk is a subject of considerable debate, and we can read, across the literature, contradictory normative statements ranging from the optimality of no exposure to that of full exposure. Professor Koch-Medina reveals that previous work has either neglected the value of the insurer's default option or has based firm value on the wrong valuation measure. Results show that whether or not an insurer takes on financial market risk is mainly a result of how risk impacts both the default option and the insurer's franchise value. His research contributes to a better understanding of how insurance firms create value.