124 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 firm’s 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 agencies’ 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 insurer’s 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 agencies’ 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 world’s leading agencies – A.M. Best and Standard and Poor (S&P) – and
establishing the extent to which organizational variables can help predict: (i) insurance firms’
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 firms’ 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 insurers’ 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. Best’s 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 world’s 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
Tourism and Empirical Applications of International Trade Theory: A Multi-Country Analysis
This paper examines the application of quantitative techniques to further our understanding of international trade theory with respect to tourism flows. The analyses are based on the construction of Balassa and Grubel-Lloyd Indices, as well as the construction of dynamic indices. The results of the analyses suggest that international trade theory has much to offer the study of international tourism flows. Many countries seem to specialize as both exporters and importers of tourism services. The analyses also explore the theoretical assertion that intra-industry trade is likely to be of importance in understanding international tourism flows
Tourism and Empirical Applications of International Trade Theory: A Multi-Country Analysis
This paper examines the application of quantitative techniques to further our understanding of international trade theory with respect to tourism flows. The analyses are based on the construction of Balassa and Grubel-Lloyd Indices, as well as the construction of dynamic indices. The results of the analyses suggest that international trade theory has much to offer the study of international tourism flows. Many countries seem to specialize as both exporters and importers of tourism services. The analyses also explore the theoretical assertion that intra-industry trade is likely to be of importance in understanding international tourism flows
The relative performance of mutual and proprietary life insurance companies in the UK: an exploratory study
After discussing the main tenets of stakeholder and agency theory, the paper provides an
exploratory empirical study of the relative performance of mutual and proprietary life
insurance companies in the UK during the period 1995-96. The mutual companies
included in the sample performed well relative to the proprietary companies in terms of
their overall financial strength, annual surpluses and investment earnings. While the
mutuals had slightly higher expense ratios than the proprietary companies, they were
relatively more cost efficient and operated with potential economies of scale. There is
also evidence that fund managers in mutuals perform at least as well on average as those
in proprietary companies
A Stakeholder Analysis of Corporate Donations: United Kingdom Evidence
Drawing a framework from stakeholder theory, this study uses 1994 data drawn
from 100 United Kingdom listed companies to test empirically whether the level of
discretionary donations made by companies to charitable, social and political causes
is related to four company-specific factors, namely leverage, company size,
profitability and ownership structure. Consistent with our hypotheses, the results
indicate that the decision to contribute funds to charities and other bodies is
positively related to company size and profitability and negatively related to
leverage. However, the study provides no support for the view that there is a link
between discretionary donations and a company’s ownership structure
Governance and Regulation of New Economy Companies: The Role of Human Capital
There has been much publicity surrounding “new economy” companies, a term embracing “dot.com”, “high-tech” and “innovative high growth” companies, amongst others. Whilst such generic terminology serves to obscure the very real differences between such companies, they are generally thought to be an important factor in economic growth despite fears as to their volatility. In economic terms such companies potentially present a number of difficulties relating to judgement problems, information asymmetry, asset specificity, imperfectly competitive markets and measurement. Such distinguishing features give rise to a high probability of market failure and may be argued to have played a significant role in the “dot.com crash”. In particular, it is thought that the role played by human capital and the associated problem of human asset specificity, poses special problems. Such difficulties may provide a justification for state intervention to regulate such companies and, in particular, their governance. This paper evaluates the the legal and regulatory framework for the governance of human capital in new economy companies by reference to the competing or complementary regulatory goals of efficiency, good governance, innovation and human capital. It further illustrates the practical effect of this framework by means of a survey of prospectuses of a sample of 50 companies listed on the Techmark index selected from three relevant groupings of sectors, which included health related, computer hardware, telecommunications and computing services companies, and related annual reports and accounts. It concludes by identifying examples of inappropriate regulation and making proposals for reform
Correction:Kinome-wide analysis of the effect of statins in colorectal cancer (British Journal of Cancer, (2021), 124, 12, (1978-1987), 10.1038/s41416-021-01318-9)
The original version of this article unfortunately contained a mistake in an author name. Lucas J. A. C. Hawinkels should be Lukas J. A. C. Hawinkels. The authors apologize for the oversight. The original article has been corrected
Kinome-wide analysis of the effect of statins in colorectal cancer
Background Epidemiological studies and meta-analyses show an association between statin use and a reduced incidence of colorectal cancer (CRC). We have shown that statins act on CRC through bone morphogenetic protein (BMP) signalling, but the exact cellular targets and underlying mechanism of statin action remain elusive. In this study, we set out to assess the influence of statins on global cancer cell signalling by performing an array-based kinase assay using immobilised kinase substrates spanning the entire human kinome. Methods CRC cells with or without Lovastatin treatment were used for kinome analysis. Findings on kinome arrays were further confirmed by immunoblotting with activity-specific antibodies. Experiments in different CRC cell lines using immunoblotting, siRNA-mediated knockdown and treatment with specific BMP inhibitor Noggin were performed. The relevance of in vitro findings was confirmed in xenografts and in CRC patients treated with Simvastatin. Results Kinome analysis can distinguish between non-specific, toxic effects caused by 10 mu M of Lovastatin and specific effects on cell signalling caused by 2 mu M Lovastatin. Statins induce upregulation of PTEN activity leading to downregulation of the PI3K/Akt/mTOR signalling. Treatment of cells with the specific BMP inhibitor Noggin as well as PTEN knockdown and transfection of cells with a constitutively active form of AKT abolishes the effect of Lovastatin on mTOR phosphorylation. Experiments in xenografts and in patients treated with Simvastatin confirm statin-mediated BMP pathway activation, activation of PTEN and downregulation of mTOR signalling. Conclusions Statins induce BMP-specific activation of PTEN and inhibition of PI3K/Akt/mTOR signalling in CRC
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