This paper presents a welfare analysis of several capital insurance programs in a rational expectation equilibrium … setting. We first explicitly characterize the equilibrium of each capital insurance program. Then, we demonstrate that a … capital insurance program based on aggregate loss is better than classical insurance, when big financial institutions have …

Insurance regulation is typically aimed at policyholder protection. In particular, regulators attempt to ensure the … financial "safety" of insurance firms, for example, by means of capital regulation, and to enhance the "affordability" of … insurance, for example, by means of price ceilings. However, these goals are in conflict. Therefore, we identify situations in …

This paper compares the shareholder-value-maximizing capital structure and pricing policy of insurance groups against … instruments. We show that using these instruments enables the group to offer insurance with less default risk and at lower … group building being beneficial for shareholders but detrimental for policyholders. -- Insurance groups ; insurer default …