The Use of Event History Analysis to Examine Insurer Insolvencies

Kim, Yong-Duck; Anderson, D.; Amburgey, Terry L.; Hickman, James C.

doi:10.2307/253694

Cited by 85 publications

(65 citation statements)

References 11 publications

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“…As such, investment performance becomes critical to the financial solidity of an insurer. (Kim, Anderson, Amburgey, & Hickman, 1995) find that investment performance is negatively correlated to insolvency rate. There are two key components of an insurer's total operating income: investment income and underwriting income.…”

Section: Review Of Literaturementioning

confidence: 85%

Analysis of Financial Stability of Indian Non Life Insurance Companies

Joo

2013

AJFA

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World over after liberalization insurance sector has undergone significant transformation. This is also true with Indian insurance market, where insurance penetration and density is very low compared to other countries. Therefore, many foreign insurance companies were lured to make entry in Indian insurance in order to insulate positive spread from large untapped insurance market, mainly by entering into joint venture with local partners. Thus Indian insurance market after liberalization was assaulted by the pressure of globalization, competition from multinational insurance companies and lavish underwriting chase which are seen as threats as well as opportunities for insurance companies. However, entry of new players has resulted into heavy underwriting losses for Indian public and private insurers. But heavy underwriting losses had reverse impact on their solvency margins. In present paper, the Insurance Solvency International Ltd. (ISI) predictors have been employed in this paper to study the solvency position of Indian non life insurers. Further, study highlights the extent of relationship between various factors and solvency of non life insurers in India by using multiple regression analysis. The result of the study has shown that claim ratio and firm size have greater impact on solvency position of insurance companies.

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Section: Review Of Literaturementioning

confidence: 85%

Analysis of Financial Stability of Indian Non Life Insurance Companies

Joo

2013

AJFA

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“…The increase in premium growth rate will ensure the growth of the company and increase of its market share. On the other hand, excessive or poorly coordinated growth of premium volume causes or aggravates other risks that may endanger the company's existence (Janotta-Simons [26] [28] found that rapid growth of premium volume is one of the causal factors in insolvency. Therefore, being excessively obsessive about the increase in the volume of the gross written premiums especially in an economic downturn may lead to the negligence of other important targets and self-destruction (Chen and Wong [24]).…”

Section: Definition Of Variablesmentioning

confidence: 99%

The Effects of Firm-Specific Factors on the Profitability of Non-Life Insurance Companies in Turkey

Kaya

2015

IJFS

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This study investigates the firm-specific factors affecting the profitability of non-life insurance companies operating in Turkey. For this purpose, data of 24 non-life insurance companies operating in Turkey from the period 2006-2013 were brought together to obtain 192 observed panel data sets. In this study, profitability is measured by two different variables: technical profitability ratio and sales profitability ratio. According to the empirical results, the firm-specific factors affecting the profitability of Turkish non-life insurance companies are the size of the company, age of the company, loss ratio, current ratio, and premium growth rate.

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“…Best (2009A.M. Best ( , 2010 Operating ratio (%) Kim et al (1995) The combined ratio less the investment income ratio. It measures overall operational profitability from underwriting and investment activities Retention ratio (%)…”

Section: Independent Variablesmentioning

confidence: 99%

“…Net premiums written as a per cent of gross premiums written Net premiums written/Average capital and surplus (%) Ambrose and Seward (1988), Harrington and Nelson (1986), Carson and Hoyt (1995), Lee and Urrutia (1996), Barniv et al (1999), Browne et al (2001), Carson and Hoyt (2003), Brockett et al (2006) Net premium written as a per cent of capital and surplus Net premiums written growth (%) Ambrose and Seward (1988), Kim et al (1995), Lee and Urrutia (1996), Pottier and Sommer (1999), Chen and Wong (2004), Brockett et al (2006), Sharpe and Stadnik (2007) Growth in net premium written…”

Section: Independent Variablesmentioning

confidence: 99%

“…Investment performance (time-varying) Return on average equity (%) BarNiv and McDonald (1992), Lee and Urrutia (1996) Annualised income after taxes as a per cent of average capital and surplus Net yield on invested assets (%) Ambrose and Seward (1988), Brockett et al (1994), Kim et al (1995), Chen and Wong (2004) Annualised investment return based on average invested assets Investment income growth (%) Investment income growth…”

Section: Independent Variablesmentioning

confidence: 99%

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A Competing Risks Dynamic Hazard Approach to Investigate the Insolvency Outcomes of Property-Casualty Insurers

Dang

2013

Geneva Pap Risk Insur Issues Pract

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This study applies a competing risks approach and an event time dynamic estimation framework to identify the characteristics underlying different insolvency resolutions incurred to U.S. property-casualty insurers during 1998-2010. The estimated hazard model relates the time-varying probability of a specific insolvency outcome to insurers' characteristics and macroeconomic conditions. The study finds that (i) the hazards for different insolvency outcomes are neither equal nor proportionate; (ii) the model for generic insolvency events and the models for outcome-specific insolvency events feature different significant factors, which are not due to random variations; and (iii) the outcomespecific insolvency models exhibit better forecast performance than the generic insolvency model within a five-year forecast horizon. The results of the study provide regulators with early warnings of financial distress, aid them in prioritising troubled insurers and identifying the areas most likely to reveal material problems, and inform about the interventions that should be taken under specific circumstances.

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The Use of Event History Analysis to Examine Insurer Insolvencies

Cited by 85 publications

References 11 publications

Analysis of Financial Stability of Indian Non Life Insurance Companies

Analysis of Financial Stability of Indian Non Life Insurance Companies

The Effects of Firm-Specific Factors on the Profitability of Non-Life Insurance Companies in Turkey

A Competing Risks Dynamic Hazard Approach to Investigate the Insolvency Outcomes of Property-Casualty Insurers

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