This paper develops a duopolistic contingent claim model to evaluate the equity
values of life insurers during a trade war. Choosing advanced (technology-oriented)
relative to backward (human capital-oriented) technology is crucial for
insurance management. A result shows that holding more capital would enhance
insurer survival. The enhancement becomes more significant when the trade war
becomes more severe and when the technology chosen by the insurers is more
backward. Capital, as such, contributes to insurance stability but discourages
advanced technology development for insurers during the trade war.
