Traditional variable annuities build retirement income for annuitants through investments in stocks and bonds. These annuities are variable because their performance depends upon the performance of uncertain financial markets. The risk of poor performance lies solely upon annuitants, rather than...

As financial intermediaries in the health care delivery system, U.S. health insurers will be strongly affected by sweeping legislative reforms adopted in 2010, both in health care and in financial regulation. In this paper, we provide useful context for interpreting these reforms and for...

Health care insurers have faced increased risks under the health care reform (PPACA) in the United States. By increasing the population of insureds, eliminating coverage caps, extending covered perils, and mandating minimum loss ratios, health care reform confronts insurers with the specter of...

In this study we compare the interplay between capital and asset risks before and during the 2007-2009 financial crisis for the US life and health insurance industries partitioned into segments by product specialization, size, and governance. The results show substantial intra-industry variation...

This paper explores the relation between capital and risk in the life insurance industry in the period after the adoption of life risk-based capital (RBC) regulation. To examine this issue, we use a simultaneous-equation partial-adjustment model. Three equations express the interrelations among...

In this article we explore U.S. life insurers' exposure to Mortgage-Backed Securities (MBS) and its potential impact on capital should the credit ratings of these bonds be lowered. We analyze two years: 2003 (well before the realization of problems with these instruments) and 2006 (immediately...

Market discipline examines the extent to which consumers and investors discipline misbehavior by financial institutions. Most previous studies have examined banks. In addition, the disciplinary function of consumers has been relatively neglected. This paper is the first to examine the...

In this paper we examine the impact of asset allocation strategies on the investment performance of life insurers in the U.S. We are especially interested in comparing the effects of active portfolio management to the effects of passive holding strategies. We model allocation decisions and...

There is serious debate about the effectiveness of the market to discipline regulated industries like banks and insurance. In this paper, we examine empirically the reaction of consumers to changes in the financial ratings of life insurers. We find that downgraded life insurers in the period...