The financial meltdown that began in 2007 revealed problems with the financial guarantee insurers and regulation of these insurers. Financial guarantee insurers, with business models dependent on AAA-credit ratings, were exposed to risks that threatened those ratings. These insurers had four...

The global trend towards tighten regulation of financial institutions and the adoption of International Financial Reporting Standards (IFRS) may hasten the unwinding of cross-shareholdings in Japan, and there are signs that this is already happening. Finding buyers for such shares is therefore a...

Given the fragmented structure of the U.S. government, business is able to capitalize on its structural power only when it is united. This paper illustrates this dynamic through an analysis of the processes leading to the enactment of the Financial Modernization Act (FMA) of 1999, which repealed...

We present the one-year claims development result (CDR) in the paid-incurred chain (PIC) reserving model. The PIC reserving model presented in Merz-Wuthrich is a Bayesian stochastic claims reserving model that considers simultaneously claims payments and incurred losses information and allows...

The paid-incurred chain (PIC) reserving method is a claims reserving method in general insurance that allows to combine claims payments and incurred losses information in a mathematical consistent way. The main criticism on the original Bayesian log-normal PIC model presented in Merz-Wuthrich...

This technical note highlights the functioning of the profit sharing mechanism of life insurance products using the example of classical German life contracts. The profit sharing and guarantee features of these contracts are potentially very costly from a capital requirements perspective, making...

Federal and state laws allow U.S. financial conglomerates to own securities, insurance and depository institutions through a holding company structure. Before the recent crisis, the federal or state agency responsible for regulating a financial conglomerate as a whole was determined by what...

Traditional life insurance policies in many markets are sold with minimum interest rate guarantees. This paper concentrates on the risk cliquet-style guarantees impose on the insurer, measured by shortfall probabilities under the so-called “real-world probability measure P”. We develop a...

We investigate how investor protection, government quality, and contract enforcement affect risk-taking and performance of insurance companies from around the world. We find that better investor protection results in less risk-taking, as do higher quality government and greater contract...