Abstract
| Language | English |
|---|---|
| Article number | 2 |
| Pages | 373-399 |
| Number of pages | 27 |
| Journal | Accounting and Business Research |
| Volume | 48 |
| Issue number | 4 |
| Early online date | 19 Dec 2017 |
| DOIs | |
| Status | Published - 2018 |
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The leverage and reinsurance effects on loss reserves in the United Kingdom's (UK) property-casualty insurance industry. / Veprauskaite, Elena; Adams, Michael.
In: Accounting and Business Research , Vol. 48, No. 4, 2, 2018, p. 373-399.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - The leverage and reinsurance effects on loss reserves in the United Kingdom's (UK) property-casualty insurance industry
AU - Veprauskaite, Elena
AU - Adams, Michael
PY - 2018
Y1 - 2018
N2 - We examine the relation between loss reserving errors, leverage and reinsurance in the UK's property-casualty insurance industry. We find that financially weak insurers under-estimate reserves to reduce leverage, and so pre-empt costly regulatory scrutiny. However, at very high leverage, insurers over-reserve, suggesting a non-linear relation between leverage and reserving policy. We also investigate whether monitoring by reinsurers reduces reserving errors, and find that highly reinsured insurers are less likely to make loss reserve errors. However, the use of proportional reinsurance does not affect loss reserve accuracy.
AB - We examine the relation between loss reserving errors, leverage and reinsurance in the UK's property-casualty insurance industry. We find that financially weak insurers under-estimate reserves to reduce leverage, and so pre-empt costly regulatory scrutiny. However, at very high leverage, insurers over-reserve, suggesting a non-linear relation between leverage and reserving policy. We also investigate whether monitoring by reinsurers reduces reserving errors, and find that highly reinsured insurers are less likely to make loss reserve errors. However, the use of proportional reinsurance does not affect loss reserve accuracy.
U2 - 10.1080/00014788.2017.1404440
DO - 10.1080/00014788.2017.1404440
M3 - Article
VL - 48
SP - 373
EP - 399
JO - Accounting and Business Research
T2 - Accounting and Business Research
JF - Accounting and Business Research
SN - 0001-4788
IS - 4
M1 - 2
ER -