Journal ArticleDOI
The Impact of Firm Risk on Property-Liability Insurance Prices
TLDR
In this paper, the authors examined the impact of an insurer's level of insolvency risk on the prices the insurer obtains for its products in the property-liability insurance market.Abstract:
This article examines the impact of an insurer's level of insolvency risk on the prices the insurer obtains for its products in the property-liability insurance market. The measures of insolvency risk used are those implied by the option pricing model of insurance. The key finding is the existence of a negative relation between insolvency risk and insurance prices. This implies that property-liability insurers are penalized for default risk through lower prices, despite the existence of guaranty funds. Other firm-specific determinants of insurance prices are also identified. The results have significant implications for insurance researchers and regulators.read more
Citations
More filters
Book ChapterDOI
Insurance and Insurance Markets
TL;DR: This paper reviewed the main theoretical and empirical contributions in insurance economics since the early 1960s and summarized the role of utility, risk, and risk aversion in the insurance literature and summarized work on the demand for insurance, insurance and resource allocation, moral hazard, and adverse selection.
Journal ArticleDOI
An Investigation of the Short‐Run and Long‐Run Stock Returns Surrounding Insurer Rating Changes
TL;DR: The authors found that stock returns move in the direction of insurer rating changes in the 12-month period prior to the announcement and that there is an additional stock price response following the announcement of a downgrade, but no response to upgrade announcements.
Journal ArticleDOI
Valuation Effects of Insurers' Security Offerings
TL;DR: In this paper, the authors examined the valuation effects of insurers' security offerings by measuring the share price response to announcements of impending security issues and found that abnormal returns associated with equity offerings are negatively related to the relative size of the offering and change in leverage and are positively related to growth in sales.
Journal ArticleDOI
Prudence as a competitive advantage: On the effects of competition on banks' risk-taking incentives
Roman Inderst,Roman Inderst +1 more
TL;DR: In this article, the authors build on the notion that corporate borrowers care about the overall riskiness of a bank's operations as their continued access to credit may depend on the bank's ability to roll over loans or to expand existing credit facilities.
Dissertation
Reinsurance and the Cost of Equity in the United Kingdom’s Non-Life Insurance Market
TL;DR: In this article, the authors examined the link between the cost of equity and the amount of reinsurance purchased by insurers in the United Kingdom's non-life insurance market and found that on average, users of a reinsurer have a lower cost than their counterparts who do not reinsure.
References
More filters
Journal ArticleDOI
Elements of Econometrics.
Ian Domowitz,Jan Kmenta +1 more
TL;DR: The Elements of Econometrics as mentioned in this paper is a textbook for upper-level undergraduate and master's degree courses and may usefully serve as a supplement for traditional Ph.D. courses in economics.
Book
Elements of econometrics
TL;DR: The emphasis is on simplification whenever possible, assuming the readers know college algebra and basic calculus, and Jan Kmenta explains all methods within the simplest framework, and generalizations are presented as logical extensions of simple cases.
Journal ArticleDOI
Contractual Provisions, Organizational Structure, and Conflict Control in Insurance Markets
David Mayers,Clifford W. Smith +1 more
TL;DR: In this article, the authors provide a foundation for a positive theory of insurance contracting with examples of its testable predictions and argue that incentive conflicts arise when discretionary action is authorized and that contractual provisions and organizational structures control sources of conflict within the insurance market.
Journal ArticleDOI
Price, Financial Quality, and Capital Flows in Insurance Markets
TL;DR: In this article, the authors developed a model of price determination in insurance markets, which predicts that the price of insurance, measured by the ratio of premiums to discounted losses, is inversely related to insurer default risk.
Journal ArticleDOI
Stock Versus Mutual Ownership Structures: The Risk Implications
TL;DR: In this paper, the authors provide empirical tests of the risk differences between two types of ownership structure in the property-liability insurance industry and provide empirical evidence that suggests stock insurers have more risk than mutuals where the risk inherent in future cash flows is proxied by the variance of the loss ratio.
Related Papers (5)
Price, Financial Quality, and Capital Flows in Insurance Markets
Stock Versus Mutual Ownership Structures: The Risk Implications
On the Corporate Demand for Insurance: Evidence from the Reinsurance Market
David Mayers,Clifford W. Smith +1 more