We offer a novel explanation of underwriting volatility in property-liability insurance markets in terms of private uncertainty over public regulatory policy. Underwriting involving random losses to policyholders is one source of risk to the equity value of insurance firms. Solvency regulations,...

In the U.S., corporate bankruptcies generally go through the court system for resolution, whereas bank failures are resolved by bank regulatory agencies. The goal of corporate bankruptcy is to maximize the value of the firm as a quot;going concernquot; in liquidation to the shareholders. In a...