The top 100 international (re)insurance groups account for 85% of the global insurance assets and thus are the driving force of global insurance supply. Yet little is known about their internal structure, business focus and the international footprint. We fill the gap by providing the first...

The paper reviews the principles of financial intermediation in insurance from the perspective of its functions in the financial system and assesses the effect of financial innovation on insurance functions. Insurance core function is managing risks driven by nature or related to human life. To...

The promise of contingent convertible capital securities (CoCos) as a 'bail-in' solution has been the subject of considerable theoretical analysis and debate, but little is known about their effects in practice. In this paper, we undertake the first comprehensive empirical analysis of bank CoCo...

The promise of contingent convertible capital securities (CoCos) as a “bail-in” solution has been the subject of considerable theoretical analysis and debate, but little is known about their effects in practice. In this paper, we undertake the first comprehensive empirical analysis of bank...

Financial intermediaries often provide guarantees that resemble out-of-the-money put options, exposing them to tail risk. We present a model in the context of the U.S. life insurance industry in which variable annuity (VA) guarantees and associated hedging operate within the regulatory capital...

Rating standards affect risk-taking behavior of firms. We present a model that explains firms' selection of target ratings and their best response to a rating standard change, which prompts some firms to increase the risk. We then test the main predictions of the model using a natural experiment...

Building on the idea that precision of credit ratings matters for the efficiency of investors' portfolio decisions, the paper analyzes the equilibrium precision of ratings. Our analysis explains why ratings are noisy, exhibit rating inflation and vary across asset classes and over the economic...

The paper analyzes the effect of competition between credit rating agencies (CRAs) on the information content of ratings. We show that a monopolistic CRA pools sellers into multiple rating classes and has partial market coverage. This provides an opportunity for market entry. The entrant designs...

Financial intermediaries often provide guarantees that resemble out-of-the-money put options, exposing them to tail risk. Using the U.S. life insurance industry as a laboratory, we present a model in which variable annuity (VA) guarantees and associated hedging operate within the regulatory...