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
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Journal ArticleDOI
The Role of Monitoring in Reducing the Moral Hazard Problem Associated with Government Guarantees: Evidence from the Life Insurance Industry
TL;DR: In this paper, the authors find that risk taking by life insurers is higher in states with guaranty funds that are underwritten by taxpayers, in states where taxpayers pay for the costs of resolving insolvencies, life insurers hold portfolios with higher overall stock market risk and higher levels of risky assets.
Journal ArticleDOI
To Hedge or Not to Hedge: Managing Demographic Risk in Life Insurance Companies
TL;DR: In this article, the implications of demographic risk on the optimal risk management mix (equity capital, asset allocation, and product policy) for a limited-liability insurance company operating in a market with insolvency-averse insurance buyers was analyzed.
Journal ArticleDOI
External Financing in the Life Insurance Industry: Evidence From the Financial Crisis
TL;DR: This paper examined the causes and consequences of external capital issuance by U.S. life insurance companies and found that new capital is issued both to support the growth of new business and to replace capital depleted by operating losses.
Journal ArticleDOI
Institutional Ownership Stability and Risk Taking: Evidence from the Life-Health Insurance Industry
TL;DR: In this article, the authors investigated the relationship between risk taking of life-health insurers and stability of their institutional ownership within a simultaneous equation system model and found that stable institutional ownership of is associated with lower total risk of insurers, supporting the prudent man law hypothesis.
Journal ArticleDOI
Internal Capital Markets and the Partial Adjustment of Leverage
TL;DR: In this article, the authors provide the first empirical evidence of a link between deviations from target leverage and ICM activity, based on data that allow them to trace intra-group capital market transactions for property-casualty insurer groups.
References
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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.
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