5,176 research outputs found
The Determinants of Financial Derivatives Use in the UK life Insurance Industry
This paper examines the determinants of financial derivatives use in the United
Kingdom (UK) life insurance industry. We estimate a probit regression model and a
Heckman two-stage sample selection regression model using a sample of 88 UK life
insurers in 1995. Our results indicate that the propensity to use derivative instruments
is positively related to a firmâs size, leverage and international links, and negatively
related to the extent of reinsurance. We also find that mutual life insurance firms have a
greater propensity to use derivatives than proprietary firms. The positive relation with
leverage and the negative relation with reinsurance support the hypothesis that UK life
insurers use derivatives to offset risk, rather than as a speculative means of income
generation
The Determinants of Credit Ratings in the United Kingdom Insurance Industry
Executive Summary
The Determinants of Credit Ratings in the United Kingdom
Insurance Industry
Academic researchers have devoted a considerable amount of attention to the activities of
credit rating agencies over the past 20 years, focusing in particular on the agenciesâ potential role
in overseeing corporate financial strength and promoting the efficient operation of financial
markets. Examinations of credit rating practices has recently extended to the insurance industry,
where the complex technical nature of market transactions leads to policyholders, investors and
others facing particularly acute information asymmetries at the point-of-sale. Published credit
ratings are therefore seen as helping to alleviate imperfections in insurance markets by providing a
third party opinion on the adequacy of an insurerâs financial health and the likelihood of it meeting
obligations to policyholders and others in the future. Although the United Kingdom (UK)
insurance market is now one of the five largest in the world, relatively little is known about the
practices of the major firms and policy-makers which influence its operations. In particular, whilst
the determinants of rating agenciesâ assessments of United States (US) insurers is well
documented, published studies have yet to provide comprehensive evidence about insurance
company ratings in the UK. This study attempts to fill this gap by examining the ratings awarded
by two of the worldâs leading agencies â A.M. Best and Standard and Poor (S&P) â and
establishing the extent to which organizational variables can help predict: (i) insurance firmsâ
decision to be rated; and (ii) the assigned ratings themselves.
Our sample of UK data comprises ratings made by A.M. Best and S&P over the period
1993-1997 for both life and property-liability insurers. The panel data we use is ordinal in nature
and is therefore analysed using an ordered probit model. However, because neither A.M. Best or
S&P rate the full population of UK insurance firms our data set is potentially subject to selfselection
bias and we therefore extend the model to correct for such problems. In particular, the
paper examines the effect of eight firm-specific variables (namely, capital adequacy, profitability,
liquidity, growth, size, mutual/stockowner status, reinsurance level, and short/long-term nature of
business) on the ratings awarded by the two agencies, as well as on insurance firmsâ decisions to
volunteer for the ratings in the first place.
In general terms, our evidence concurs with earlier US findings, and suggests that
although the decision to be rated by either of the agencies is largely influenced by a common set
of factors, the determinants of the ratings themselves appear to differ. Specifically, our first main
finding is that insurersâ decisions to be rated by either A.M. Best or S&P is positively related to
surplus growth, profitability and leverage. Second, while we find that A.M. Bestâs ratings are
positively linked to profitability and liquidity, as well as being generally higher for mutual insurers,
the findings for S&P differ substantially. Although liquidity again exerted a positive influence on
assigned ratings, the only other statistically significant variable was financial leverage, which had a
negative sign.
We believe that the results of our research are of potential importance for companies
operating in insurance markets as well as for policy-makers, brokers and others. For example, the
evidence that mutual insurers are generally assigned higher ratings than stock insurers suggests
that certain publicly-traded insurers, in particular new entrants, might not possess sound financial
strength and may require closer regulatory scrutiny than other, more established, insurance firms.
In addition, the finding that liquidity has a significantly positive effect on ratings assigned by two
of the worldâs leading credit agencies should provide a measure of confidence about the
robustness of the ratings to industry regulators, policyholders and investors in the UK. This could
imply that external ratings might eventually play a role in substituting for costly industry
regulation. The study concludes that although the factors influencing the decision to be rated by
A.M. Best or S&P are broadly the same, a degree of variability exists in the variables which
influence the actual ratings themselves. Insurance company managers should be aware of this
when contemplating whether to seek an independent rating and which agency to choose for the
assessment. We therefore believe that this study fills an important gap in the literature about key
players in the important UK insurance market and provides a basis for the conduct of future
research
Structural Forecasts for the Danish Economy Using the Dynamic-AAGE Model
We describe how an applied dynamic general equilibrium model of the Danish economy has been developed to generate structural forecasts. The forecasts provide a microeconomic picture that is consistent with a macroeconomic scenario and the other inputs. We provide an overview of the inputs required to generate the forecasts and of the forecast methodology. Finally, we present aspects of the forecasting results.Research and Development/Tech Change/Emerging Technologies,
Zeeman-limited Superconductivity in Crystalline Al Films
We report the evolution of the Zeeman-mediated superconducting phase diagram
(PD) in ultra-thin crystalline Al films. Parallel critical field measurements,
down to 50 mK, were made across the superconducting tricritical point of films
ranging in thickness from 7 ML to 30 ML. The resulting phase boundaries were
compared with the quasi-classical theory of a Zeeman-mediated transition
between a homogeneous BCS condensate and a spin polarized Fermi liquid. Films
thicker than 20 ML showed good agreement with theory, but thinner films
exhibited an anomalous PD that cannot be reconciled within a homogeneous BCS
framework.Comment: 8 pages, 9 figure
The correspondence of W.E.B. Du Bois and Booker T. Washington
Contained in this thesis is an annotated edition of the correspondence between the
African-American leaders W.E.B. Du Bois and Booker T. Washington. Du Bois and
Washington would go on to become rivals, their philosophies of education and racial
uplift diverging from one another. Du Bois favored vocal protest and higher education,
while Washington preferred a gradual approach of vocational education and economic
advancement. However, this correspondence sees them attempting, albeit unsuccessfully,
to work together. Covering the decade between 1894 and 1904, the letters touch on a
variety of political, social, and educational topics at a crucial time for race relations in
America. The differences between the two men that would lead to their split - age,
regional origin, education, philosophy - are seen in the correspondence, but so too is a
spirit of cooperation. These themes are explored in an introductory essay, while other
more specific contextual details are provided in the footnotes accompanying the letters.
The many individuals mentioned by Du Bois and Washington are annotated, allowing the
reader a fuller understanding of the social world of black activism at the turn of the
twentieth century. Narrative material is provided to help bridge the gap between letters,
and a timeline detailing the relationship between the two men is also included. While
some of these letters have been published before, their presentation as part of an
annotated correspondence allows for a greater understanding of this primary source
material
Internal Short Distance Migration and College Enrollment in Mississippi
[No abstract provided.
The nitrogen factor in sweet potato production in Iowa
The general aspects of the effect of nitrogen fertilization on the yield, storage quality and chemical composition of sweet potatoes have been covered in this three-year investigation at Muscatine Island;Sweet potatoes responded to nitrogen fertilizers whenever leaching of the natural soil nitrates occurred. The use of delayed applications of nitrogen appears to be the best approach to the solution of the problem;No nitrogen should be applied to the soil until the plants have become established. Then, providing that a loss of soil nitrates is probable because of leaching due to heavy rainfall, an initial application of nitrogen should be made at this time. Further applications should be made if the plants continue to show symptoms of nitrogen deficiency or if other rainy periods follow. Several inorganic fertilizers and possibly uramon are suitable sources of nitrogen for side-dressing;Phosphorus and potassium are definitely limited in the soils used in the investigation and these nutrients must be supplied before beneficial effects can be secured from the use of nitrogen;Nitrogen fertilizer applications showed no consistent or pronounced effect on the storage qualities and the sugar, starch or soluble nitrate content of sweet potatoes. The use of delayed applications of nitrogen increased the colloidal nitrogen content of the roots and in one year materially reduced the loss from storage rots
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