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Insurer Opacity and Ownership Structure

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  • Stanley R. Adamson
  • David L. Eckles
  • Stephen Haggard

Abstract

We examine the differences in opacity among insurers based on differencesin their ownership structures using “split” bond ratings as a proxy for opacity. Ouranalyses are consistent with mutual insurers being more opaque than stock insurers.These findings are consistent with the owners of mutual insurers being so dispersedand having managed the owner/manager conflict well enough that the opacity ofmutual insurer operations is less important to their owners. On the other hand, ownersof stock insurers demand relatively less opaque behavior on the part of managers. Thisfinding has important implications for investors, rating agencies, and regulatorscharged with evaluating the financial condition of insurers.

Suggested Citation

  • Stanley R. Adamson & David L. Eckles & Stephen Haggard, 2014. "Insurer Opacity and Ownership Structure," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 37(2), pages 93-134.
    • Handle: RePEc:wri:journl:v:37:y:2014:i:2:p:93-134
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    Cited by:

    1. Degryse, Hans & Van Hulle, Cynthia & Smedts, Kristien, 2017. "Risk-sharing benefits and the capital structure of insurance companies," CEPR Discussion Papers 11838, C.E.P.R. Discussion Papers.
    2. Chia‐Chun Chiang & Hugh Hoikwang Kim & Greg Niehaus, 2022. "Opaque liabilities, learning, and the cost of equity capital for insurers," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(4), pages 1031-1076, December.

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