Abstract Prior research suggests that neither the choice to own life insurance nor amount purchased is consistently related presence of children in household. While these perplexing findings are based on a static framework, we alternatively examine demand dynamic framework as function changes household cycle and financial condition. Our results indicate both statistically economically significant relation between events, such new parenthood, for insurance. We also provide evidence support...

This study extends previous research on life insurer insolvency by providing empirical evidence a large (nonmatched-pair) sample of insurers based three alternative types statistical models. The utilizes 1986 through 1990 data for that did or not become financially impaired during 1989 1991. Empirical suggests surplus measures and leverage are strong indicators financial strength; however, no is found relationship between state minimum capital requirements insolvency. Classification rates...

Abstract The importance of managerial decisions related to interest‐sensitive cash flows has received considerable attention in the insurance literature. Consistent with nature insurer assets and liabilities, empirical research shown that insolvency is significantly interest rate volatility. We investigate sensitivity monthly stock returns life insurers based on a generalized autoregressive conditionally heteroskedastic mean (GARCH–M) model. examine three different portfolios (equally...

A bstract Prior research provides theoretical insight into factors likely to impact the decision mitigate such as degree of risk aversion, cost market insurance, and self‐insurance. We provide empirical evidence related several hypotheses from self‐insurance literature on mitigate.

This study identifies factors exogenous to individual insurers that are statistically related the overall rate of life-health insurer insolvencies. is a departure from methodologies prior studies, which have focused primarily on firm-specific characteristics in assessing insolvency risk. Empirical analysis based quarterly data 1972 through 1994. Results indicate insolvencies positively increases long-term interest rates, personal income, unemployment, stock market, and number insurers,...

Abstract The Society of Actuaries seeks to provide actuaries life insurance companies with a systematic approach for estimating the adverse effects economic developments that could impede insurer performance. Toward end, this study combines market and factors insurerspecific data form dynamic financial models insurers. Empirical analysis is based on annual from 1985 through 1995 1,593 By identifying important exogenous insurer-specific related performance, provides basis build individual...

Abstract We examine market risk, interest rate and interdependencies in returns return volatilities across three insurer segments within a System‐GARCH framework. Three main results are obtained: risk is greatest for accident health (A&H) insurers, followed by life (Life) property casualty (P&C) insurers; sensitivity negative Life significant with the magnitude being strongest between P&C A&H insurers. The implication that diversification benefits arise other of insurance...

Abstract Previous research has examined the demand for life insurance policy loans using aggregate loan data. In contrast, we use a detailed household survey data set containing and information to alternatively, in some cases more directly, examine four hypotheses traditionally associated with demand. Our provides first U.S. evidence (in post–World War II period) support of emergency fund hypothesis. particular, find that proxies used here reveal significantly positive relation between...

Assessment of structural damage is a complex subject imbued with uncertainty and vagueness. This complexity arises from the use subjective opinion imprecise numerical data. An analysis integrity buried concrete box structure accomplished using combined nonnumeric numeric information. Expert opinions on are used to develop portion code. Fuzzy sets quantify linguistic variables since this type information inherently vague imprecise. Because size problem, method in form fuzzy weighted‐average...

SUMMARY Based on vehicle constraints and known human operator characteristics, a strategy model was postulated for describing behavior in the lane keeping task. This includes nonlinear thresholds operating yaw lateral translation, random input sources to account spurious driver activity, smoothing response lag. The output of is steering wheel position To determine parameters suitability behavior, recordings were made driver-subjects performing lane-keeping task moving base driving simulator...

Abstract Corporate name changes are relatively common events, with some evidence suggesting that strategic in nature. Although prior research has examined the effect of on firm, these studies have focused primarily stock price reaction to changes. Such a focus number limitations, including reliance samples consist solely publicly traded firms and an inability determine whether source impact is driven by increases revenue, efficiency, and/or reductions costs. We overcome limitations testing...

Abstract Loss reserves are a discretionary tool for managing insurer earnings, with more accurate and/or less volatile reserve errors resulting in higher accruals quality. We investigate whether quality is related to financial strength ratings. Specifically, we use loss as measure of the and examine overall quality, well decomposition into innate find that firms lower‐quality (noisier) receive lower ratings from A.M. Best. This result holds both accruals. Overall, provide first evidence...

Abstract We develop a model of insurance pricing under heterogeneous lapse rates with asymmetric information about likelihood within the context an optional two‐part tariff as screening device for future policyholder behavior. then test consumer self‐selection using policy‐level data on life backdating. exploit randomness in initial size to separately identify selection and sunk cost effects backdating proclivity. find that consumers who are less likely self‐select into structure we also...

We study optimal insurance, consumption, and portfolio choice in a framework where family purchases life insurance to protect the loss of wage earner's human capital. Explicit solutions are obtained by employing constant absolute risk aversion utility functions. show that purchase is not monotonic function correlation between financial market. Meanwhile, decision explicitly affected family's preferences general. The model also predicts uses investment hedge stochastic risk.

Driving Forces of Policy Loan Demand Previous research has found several variables related to the demand for life insurance policy loans, including market interest rates (Schott, 1971; Bykerk and Thompson, 1979; Cummins, 1973), personal income (Wood, 1964; Rejda, 1966), unemployment rate (Cummins, costs alternative sources credit (Day Hendershott, 1977). loans constitute a form disintermediation insurers are important because they disrupt insurer cash flow impose an opportunity cost if...

Prior research suggests that the occurrence of a catastrophe may lead to increases in risk mitigation, perception, and demand for insurance. Given extensive damage inflicted by major natural disasters, such phenomenon is intuitive property risk. However, literature includes theory evidence suggest broader behavioral perspective, we therefore examine possible link between catastrophes subsequent insurance against mortality Based on U.S. state-level data period 1997 through 2008, provide...

Covers advancements in spacecraft and tactical strategic missile systems, including subsystem design application, mission analysis, materials structures, developments space sciences, processing manufacturing, operations, applications of technologies to other fields.

Abstract We provide the first evidence on effects of executive compensation corporate risk management for insurers. Our unique data set allows construction a new, more complete measure behavior. Specifically, we include hedging‐driven usage not only derivatives but also insurance. To address potential endogeneity, utilize difference‐in‐differences approach, based implementation FAS 123R that required firms to expense stock‐based at fair value. find decline in convexity following led...