Findings in Insurance Reported from National Chengchi University (How Does Actual Relative To Target Leverage Affect Reinsurance Use?): Insurance

2023 NOV 08 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Fresh data on Insurance are presented in a new report. According to news reporting from Taipei, Taiwan, by NewsRx journalists, research stated, “This study investigates the relationship between capital structure deviation and reinsurance use. Prior studies on capital structures and hedging focus on how actual leverage is related to risk management tools.”

The news correspondents obtained a quote from the research from National Chengchi University, “Using a sample of U.S. property-liability insurers from 2002 to 2021 and a simultaneous equations model, we argue and find that for overleveraged (underleveraged) in-surers, the higher the actual leverage, the more (less) reinsurance use. Collectively, insurers with more deviations from their target leverages tend to purchase more reinsurance. Our evidence indicates that such capital structure deviations play an important role in dictating reinsurance use. We also find that these relationships are moderated by external shocks, including financial crises, catastrophic and pandemic events.”

According to the news reporters, the research concluded: “The results imply that regulators may pay close attention to not only insurers’ actual leverages level but also their capital structure deviations, which could potientilly cause financial insolvency.”

This research has been peer-reviewed.

For more information on this research see: How Does Actual Relative To Target Leverage Affect Reinsurance Use? International Review of Economics & Finance, 2023;88:874-890. International Review of Economics & Finance can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; International Review of Economics & Finance - http://www.journals.elsevier.com/international-review-of-economics-and-finance/)

Our news journalists report that additional information may be obtained by contacting Yung-Ming Shiu, National Chengchi University, Dept Risk Management & Insurance, 64, Sec 2, Zhi-Nan Rd, Taipei 11605, Taiwan.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.iref.2023.07.028. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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