The variation in the degree of price regulation in the property-liability insurance market in Canada varies across time and space, creating an opportunity to test a recurring theory in regulatory economics: that price regulated firms have higher levels of financial leverage. Using an...

This paper investigates strategic brinksmanship between regulated property-liability insurance firms and their regulators. Prior research suggests that firms increase their financial leverage, and thus their probability of bankruptcy and expected bankruptcy costs, in order to mitigate the...

We examine the effect of the bond capital supply uncertainty of institutional investors (e.g., mutual bond funds and insurance companies) on the leverage of the firm using a novel data set. Our main finding is that the supply uncertainty of the firm's bond investor base — measured as (i) the...

This paper considers the question of the most appropriate severity distribution estimator for Loss Distribution Analysis (LDA) on operational risk data. We compare the performance of four severity distribution estimators, three well known and one relatively new and assess their suitability for...

Mutual insurance companies and stock insurance companies are different forms of organized risk sharing: policyholders and owners are two distinct groups in a stock insurer, while they are one and the same in a mutual. This distinction is relevant to raising capital and selling policies in the...

Demographic risk, i.e., the risk that life tables change in a nondeterministic way, is a serious threat to the financial stability of an insurance company having underwritten life insurance and annuity business. The inverse influence of changes in mortality laws on the market value of life...

Using a Japanese sample of 3024 firm-year observations in the period 2000 to 2002, we investigate the relation between cash flow, debt, investment and performance according to whether the firm is multinational (versus domestic), keiretsu (versus independent) or both multinational and keiretsu....

In spite of the fact that they can draw on a larger, more liquid and more diversified pool of capital than the equity of reinsurance companies, financial markets have failed to displace reinsurance as the primary risk-sharing vehicle for natural catastrophe risk. We show that this failure can be...

Enterprise Risk Management (ERM) is a body of knowledge - concepts, methods, and techniques - that enables a firm to understand, measure, and manage its overall risk so as to maximize the firm's value to shareholders and policyholders. The purpose of this paper is to demonstrate this...

This paper investigates the possibility that managers of insurance firms have an incentive to manipulate accounting results in order to maximize their total compensation. Insurance company executives are in a relatively unique position in that they may be able to manipulate their total...