Under pressure: investment behaviour of insurers under different financial and regulatory conditions

Willie Dion Reddic

doi:10.1057/s41288-020-00174-7

Under pressure: investment behaviour of insurers under different financial and regulatory conditions

Willie Dion Reddic

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

Firms that have losses are expected to sell tax-free securities and replace them with taxable securities since they can no longer benefit from tax savings. However, after the most recent financial crisis, firms’ decisions to rebalance their investment portfolios may have led to additional losses during a period of stressed financial performance and increased insurance regulation. This study examines portfolio allocation behaviour in the property and casualty insurance industry. The results show that investment limitations imposed by insurance regulators can inhibit desired investment allocation post the financial crisis.

Original language	English (US)
Pages (from-to)	1-20
Number of pages	20
Journal	Geneva Papers on Risk and Insurance: Issues and Practice
Volume	46
Issue number	1
DOIs	https://doi.org/10.1057/s41288-020-00174-7
State	Published - Jan 2021
Externally published	Yes

Keywords

Insurance
Portfolio rebalance
Regulation
Statutory accounting principles
Tax-free and taxable securities

ASJC Scopus subject areas

Accounting
General Business, Management and Accounting
Finance
Economics and Econometrics

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10.1057/s41288-020-00174-7

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abstract = "Firms that have losses are expected to sell tax-free securities and replace them with taxable securities since they can no longer benefit from tax savings. However, after the most recent financial crisis, firms{\textquoteright} decisions to rebalance their investment portfolios may have led to additional losses during a period of stressed financial performance and increased insurance regulation. This study examines portfolio allocation behaviour in the property and casualty insurance industry. The results show that investment limitations imposed by insurance regulators can inhibit desired investment allocation post the financial crisis.",

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AB - Firms that have losses are expected to sell tax-free securities and replace them with taxable securities since they can no longer benefit from tax savings. However, after the most recent financial crisis, firms’ decisions to rebalance their investment portfolios may have led to additional losses during a period of stressed financial performance and increased insurance regulation. This study examines portfolio allocation behaviour in the property and casualty insurance industry. The results show that investment limitations imposed by insurance regulators can inhibit desired investment allocation post the financial crisis.

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KW - Regulation

KW - Statutory accounting principles

KW - Tax-free and taxable securities

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Under pressure: investment behaviour of insurers under different financial and regulatory conditions

Abstract

Keywords

ASJC Scopus subject areas

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