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Title: Reinsurance and Liquidity: Evidence from the United Kingdom General Insurance Industry
Authors: 許永明
Liu, Hui Hsuan
Shiu, Yung Ming
Liu, Tsung-Chi
Contributors: 風管系
Keywords: reinsurance;liquidity;general insurers;cash-constraint argument;substitution argument
Date: 2016-04
Issue Date: 2017-08-23 11:21:38 (UTC+8)
Abstract: This paper aims to simultaneously examine the effect of liquidity on reinsurance use and the reverse causality of reinsurance on liquidity. Using a sample of U.K. general insurers from 1994 to 2011, we find that insurers with higher liquidity tend to purchase more reinsurance, and those with higher reinsurance dependence tend to maintain higher liquidity. Our data indicates that the cash-constraint argument dominates the substitution argument. We further find an inverted U-shaped relation between reinsurance and liquidity. Particular attention should be paid to the less liquid insurers that purchase less reinsurance because they have both less underwriting and liquidity risk management, and thus are exposed to a higher level of insolvency risk.
Relation: Geneva Papers on Risk and Insurance: Issues and Practice, 41(2), 307-324
Data Type: article
DOI 連結:
Appears in Collections:[風險管理與保險學系 ] 期刊論文

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