The Relationships among the Demand for Reinsurance, Liquidity, and Leverage in the US Property-Liability Insurance Industry=美國財產責任保險公司再保險、流動性及財務槓桿關係之分析

Abstract

Using pooled time-series and cross-sectional data from 1994 to 2006, we examine the interrelations among the demand for reinsurance, liquidity, and leverage in the U.S. property-liability insurance industry. Three structural equations are simultaneously estimated on the basis of a two-stage least squares paradigm. On the one hand, the empirical results indicate that insurers` liquidity and reinsurance demand are substitutes for each other, and the same relationship is founds for liquidity and leverage. On the other hand, our empirical findings support the fact that reinsurance demand and leverage are complementary.