Financial Instruments as Capital Management Tools for Maximizing Shareholders’ Value

The world’s financial markets have exploded with new products and new techniques such as derivatives and securitisations giving rise to huge new markets. Competition has transformed the financial services industry, forcing them into providing new products and supplies their services more cheaply. At the same time their clients constantly demand for effective and efficient management of their capital base, especially in the insurance industry while shareholders’ expectations are also rising. This paper reviews the key financial instruments including insurance as capital management tools for maximising shareholders’ value and also looks at the current developments and tries to show how equity, debt and insurance are complementary to deriving optimal finance performance structures.