This paper studies the effects of company risk and guaranty funds on life insurance in force using company-by-state level data during the 1985-2010 period. Our primary objective is to use the variation in the timing of guaranty fund adoptions across states to identify the impact of public...

This paper studies the impact of lenders’ sensitivity to company risk on the extent of market discipline in life insurance during the 1985-2010 period. We find strong market discipline for young insurers but not for older insurers, supporting the strong influence of lenders’ trust attached...