The global financial crisis of 2007-2008 focused the attention of financial authorities on developing methods to forecast and avoid future financial crises of similar magnitude. We contribute to the literature on crisis prediction in several important ways. First, we develop an early warning...

Health care insurers have faced increased risks under the health care reform (PPACA) in the United States. By increasing the population of insureds, eliminating coverage caps, extending covered perils, and mandating minimum loss ratios, health care reform confronts insurers with the specter of...

Traditional variable annuities build retirement income for annuitants through investments in stocks and bonds. These annuities are variable because their performance depends upon the performance of uncertain financial markets. The risk of poor performance lies solely upon annuitants, rather than...

In this study we compare the interplay between capital and asset risks before and during the 2007-2009 financial crisis for the US life and health insurance industries partitioned into segments by product specialization, size, and governance. The results show substantial intra-industry variation...

As financial intermediaries in the health care delivery system, U.S. health insurers will be strongly affected by sweeping legislative reforms adopted in 2010, both in health care and in financial regulation. In this paper, we provide useful context for interpreting these reforms and for...

This paper explores the relation between capital and risk in the life insurance industry in the period after the adoption of life risk-based capital (RBC) regulation. To examine this issue, we use a simultaneous-equation partial-adjustment model. Three equations express the interrelations among...

Market discipline examines the extent to which consumers and investors discipline misbehavior by financial institutions. Most previous studies have examined banks. In addition, the disciplinary function of consumers has been relatively neglected. This paper is the first to examine the...

There is serious debate about the effectiveness of the market to discipline regulated industries like banks and insurance. In this paper, we examine empirically the reaction of consumers to changes in the financial ratings of life insurers. We find that downgraded life insurers in the period...

Dearth of market values for firms in several industries is a serious limitation in empirical research. Book value and other proxies may not be satisfactory surrogates. This study provides the methodologies of matching-allocation and multiple imputation as remedies for lack of marked-to-market...

In this paper we examine the impact of asset allocation strategies on the investment performance of life insurers in the U.S. We are especially interested in comparing the effects of active portfolio management to the effects of passive holding strategies. We model allocation decisions and...