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The determinants of solvency in the United Kingdom life insurance market

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  • Yung-Ming Shiu

Abstract

This paper examines the solvency determinants, including economic and firm-specific factors, in the United Kingdom life insurance market. Using panel data for 1986-1999, it is found that solvency was positively related to bonds-to-total assets, equities-to-total assets, and level of new business, but negatively related to unexpected inflation, market competition, assets held to cover linked liabilities-to-total assets, life and general annuity reserves-to-total reserves, pension reserves-to-total reserves, permanent health reserves-to-total reserves, other reserves-to-total reserves, firm size, and insurance leverage. Based on panel data for the three subperiods, 1986-1990, 1990-1994, and 1994-1999, it was further found that solvency determinants changed from one epoch to another.

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  • Yung-Ming Shiu, 2005. "The determinants of solvency in the United Kingdom life insurance market," Applied Economics Letters, Taylor & Francis Journals, vol. 12(6), pages 339-344.
    • Handle: RePEc:taf:apeclt:v:12:y:2005:i:6:p:339-344
    DOI: 10.1080/13504850500092640
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    References listed on IDEAS

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    1. M. Adams & M. Buckle, 2003. "The determinants of corporate financial performance in the Bermuda insurance market," Applied Financial Economics, Taylor & Francis Journals, vol. 13(2), pages 133-143.
    2. Warner, Jerold B, 1977. "Bankruptcy Costs: Some Evidence," Journal of Finance, American Finance Association, vol. 32(2), pages 337-347, May.
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    Cited by:

    1. Jassem Alokla & Arief Daynes & Paraskevas Pagas & Panagiotis Tzouvanas, 2023. "Solvency determinants: evidence from the Takaful insurance industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(4), pages 847-871, October.
    2. Yakob Rubayah & Yusop Zulkornain & Radam Alias & Ismail Noriszura, 2012. "Solvency Determinants of Conventional Life Insurers and Takaful Operators," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 6(2), pages 1-25, June.
    3. Yakop, Rubayah & Yusop, Zulkornain & radam, alias & Ismail, Noriszura, 2012. "Camel Rating Approach to Assess the Insurance Operators Financial Strength," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 46(2), pages 3-15.
    4. Yousef Abdel Latif Abdel Jawad & Issam Ayyash, 2019. "Determinants of the Solvency of Insurance Companies in Palestine," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(6), pages 188-195, October.
    5. Abdul Latif Alhassan & Nicholas Biekpe, 2018. "Competition and Risk-Taking Behaviour in the Non-Life Insurance Market in South Africa," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(3), pages 492-519, July.

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