TY - JOUR
T1 - Testing for trade-offs in the reinsurance decision of U.K. life insurance firms
AU - Abdul Kader, Hala
AU - Adams, Mike
AU - Mouratidis, Kostas
PY - 2010/6
Y1 - 2010/6
N2 - Drawing a framework from the insurance and finance literature, we test for trade-offs between underwriting, solvency, and tax management objectives in the decision to purchase reinsurance in U.K.-based life insurance firms. Using a panel data design covering 630 firm-year observations for 1992-2004, we observe that underwriting and solvency risks, and expected taxes, appear to be important determinants of the level of reinsurance purchased by U.K. life insurance firms. Additionally, some of these key determinants interact with each other, suggesting that the reinsurance decision is conjointly determined. Two of the three interactions tested, however, have an impact that is in the direction opposite to that predicted. In addition, firm-specific factors, such as product mix and profitability, appear to explain the corporate decision to purchase reinsurance.
AB - Drawing a framework from the insurance and finance literature, we test for trade-offs between underwriting, solvency, and tax management objectives in the decision to purchase reinsurance in U.K.-based life insurance firms. Using a panel data design covering 630 firm-year observations for 1992-2004, we observe that underwriting and solvency risks, and expected taxes, appear to be important determinants of the level of reinsurance purchased by U.K. life insurance firms. Additionally, some of these key determinants interact with each other, suggesting that the reinsurance decision is conjointly determined. Two of the three interactions tested, however, have an impact that is in the direction opposite to that predicted. In addition, firm-specific factors, such as product mix and profitability, appear to explain the corporate decision to purchase reinsurance.
UR - http://www.scopus.com/inward/record.url?scp=78149451059&partnerID=8YFLogxK
UR - http://dx.doi.org/10.1177/0148558X1002500309
U2 - 10.1177/0148558X1002500309
DO - 10.1177/0148558X1002500309
M3 - Article
SN - 0148-558X
VL - 25
SP - 491
EP - 522
JO - Journal of Accounting, Auditing and Finance
JF - Journal of Accounting, Auditing and Finance
IS - 3
ER -