Skew group algebras of piecewise hereditary algebras are piecewise hereditary

We show that the main results of Happel-Rickard-Schofield (1988) and Happel-Reiten-Smalo (1996) on piecewise hereditary algebras are coherent with the notion of group action on an algebra. Then, we take advantage of this compatibility and show that if G is a finite group acting on a piecewise hereditary algebra A over an algebraically closed field whose characteristic does not divide the order of G, then the resulting skew group algebra A[G] is also piecewise hereditary.Comment: 13 pages, typos corrected. To appear in J. Pure Appl. Algebr

Efficiency of Insurance Firms with Endogenous Risk Management and Financial Intermediation Activities

Risk management is now present in many economic sectors. This paper investigates the role of risk management in creating value for financial institutions by analyzing U.S. property-liability insurers. Property-liability insurers are financial intermediaries whose primary roles in the economy are risk pooling and risk bearing. The risk pooling and risk bearing functions performed by insurers are the primary determinants of the need for risk management. The main goal of this paper is to test how risk management and financial intermediation activities create value for insurers by enhancing economic efficiency. Insurer cost efficiency is measured relative to an econometric cost function. Since the prices of risk management and financial intermediation services are not observable, we consider these two activities as intermediate outputs and estimate their shadow prices. The shadow prices isolate the contributions of risk management and financial intermediation to insurer cost efficiency. The econometric results show that both activities significantly increase the efficiency of the property-liability insurance industry.Risk management, US property-liability insurer, risk pooling, financial intermediation, economic efficiency, intermediate output, shadow price, cost function, translog approximation

The Costs and Benefits of Reinsurance

Purchasing reinsurance reduces insurers’ insolvency risk by stabilizing loss experience, increasing capacity, limiting liability on specific risks, and/or protecting against catastrophes. Consequently, reinsurance purchase should reduce capital costs. However, transferring risk to reinsurers is expensive. The cost of reinsurance for an insurer can be much larger than the actuarial price of the risk transferred. In this article, we analyze empirically the costs and the benefits of reinsurance for a sample of U.S. property-liability insurers. The results show that reinsurance purchase increases significantly the insurers’ costs but reduces significantly the volatility of the loss ratio. With purchasing reinsurance, insurers accept to pay higher costs of insurance production to reduce their underwriting risk.reinsurance, insolvency risk, risk management, financial intermediation, cost functions, panel data.

Efficiency of Insurance Firms with Endogenous Risk Management and Financial Intermediation Activities

Risk management is now present in many economic sectors. This paper investigates the role of risk management in creating value for financial institutions by analyzing U.S. property-liability insurers. Property-liability insurers are financial intermediaries whose primary role in the economy is risk pooling and risk bearing. The risk pooling and risk bearing functions performed by insurers are the primary determinants of the need for risk management. The main goal of this paper is to test how risk management and financial intermediation activities create value for insurers by enhancing economic efficiency. Insurer cost efficiency is measured relative to an econometric cost frontier. Since the prices of risk management and financial intermediation services are not observable, we consider these two activities as intermediate outputs and estimate their shadow prices. The shadow prices isolate the contributions of risk management and financial intermediation to insurer cost efficiency. The econometric results show that both activities significantly increase the efficiency of the property-liability insurance industry.

Representation theory of partial relation extensions

Let C be a finite dimensional algebra of global dimension at most two. A partial relation extension is any trivial extension of C by a direct summand of its relation C-C-bimodule. When C is a tilted algebra, this construction provides an intermediate class of algebras between tilted and cluster tilted algebras. The text investigates the representation theory of partial relation extensions. When C is tilted, any complete slice in the Auslander-Reiten quiver of C embeds as a local slice in the Auslander-Reiten quiver of the partial relation extension; Moreover, a systematic way of producing partial relation extensions is introduced by considering direct sum decompositions of the potential arising from a minimal system of relations of C

Efficiency of Insurance Firms with Endogenous Risk Management and Financial Intermediation Activities

Risk management is now present in many economic sectors. This paper investigates the role of risk management in creating value for financial institutions by analyzing U.S. property-liability insurers. Property-liability insurers are financial intermediaries whose primary roles in the economy are risk pooling and risk bearing. The risk pooling ad risk bearing functions performed by insurers are the primary determinants of the need for risk management. The main goal of this paper is to test how risk management and financial intermediation activities create value for insurers by enhancing economic efficiency. Insurer cost efficiency is measured relative to an econometric cost function. Since the prices of risk management and financial intermediation services are not observable, we consider these two activities as intermediate outputs and estimates their shadow prices. The shadow prices isolate the contributions of risk management and financial intermediation to insurer cost efficiency. The econometric results show that both activities significantly increase the efficiency of the property-liability insurance industry