Universität zu Köln

Berry-Stoelzle, Thomas R., Nini, Gregory P. and Wende, Sabine ORCID: 0000-0003-3055-0663 (2014). EXTERNAL FINANCING IN THE LIFE INSURANCE INDUSTRY: EVIDENCE FROM THE FINANCIAL CRISIS. J. Risk Insur., 81 (3). S. 529 - 563. HOBOKEN: WILEY. ISSN 1539-6975

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Abstract

The financial crisis and subsequent recession generated sizable operating losses for life insurance companies, yet the consequences were far less significant than for other financial intermediaries. The ability to quickly generate new capital through external issuance and dividend reductions let life insurers maintain healthy levels of equity capital. We use this experience to examine the causes and consequences of external capital issuance by U.S. life insurance companies. We show that, in general, new capital is issued both to support the growth of new business and to replace capital depleted by operating losses. This second channel is particularly important during macroeconomic recessions. Notably, we do not find any evidence that insurers had difficulty generating new capital, unlike other financial service providers that required large amounts of public support. For life insurers, what changed following the financial crisis was the demand to raise external capital, but the supply of external capital appears to have remained constant.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Berry-Stoelzle, Thomas R. UNSPECIFIED UNSPECIFIED UNSPECIFIED Nini, Gregory P. UNSPECIFIED UNSPECIFIED UNSPECIFIED Wende, Sabine UNSPECIFIED orcid.org/0000-0003-3055-0663 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-430697
DOI:	10.1111/jori.12042
Journal or Publication Title:	J. Risk Insur.
Volume:	81
Number:	3
Page Range:	S. 529 - 563
Date:	2014
Publisher:	WILEY
Place of Publication:	HOBOKEN
ISSN:	1539-6975
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language INTERNAL CAPITAL-MARKETS; SYSTEMIC RISK; INSTITUTIONS; INVESTMENT; DISCIPLINE; MANAGEMENT; QUALITY; FIRMS; PRICE Multiple languages Business, Finance; Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/43069