IDEAS home Printed from https://ideas.repec.org/a/taf/eurjfi/v28y2022i6p551-570.html
   My bibliography  Save this article

Risk management and the cost of equity: evidence from the United Kingdom’s non-life insurance market

Author

Listed:
  • Vineet Upreti
  • Mike Adams
  • Yihui Jia

Abstract

We investigate the effect of risk management (reinsurance) on the corporate cost of equity using panel data drawn from the United Kingdom’s (UK) non-life insurance industry. Our results show that use of reinsurance lowers the cost of equity but that the relation is non-linear. We find that the rate of reduction declines as the level of premiums ceded relative to total gross premiums written increases. We also find that the reinsurance-cost of equity relation is moderated by the risk of financial distress/bankruptcy. This moderating relation is robust to the use of three alternative measures of financial distress and bankruptcy risk.

Suggested Citation

  • Vineet Upreti & Mike Adams & Yihui Jia, 2022. "Risk management and the cost of equity: evidence from the United Kingdom’s non-life insurance market," The European Journal of Finance, Taylor & Francis Journals, vol. 28(6), pages 551-570, April.
    • Handle: RePEc:taf:eurjfi:v:28:y:2022:i:6:p:551-570
    DOI: 10.1080/1351847X.2021.1936588
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1351847X.2021.1936588
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1351847X.2021.1936588?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Silvia Bressan, 2023. "Reinsurance and Sustainability: Evidence from International Insurers," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 13(6), pages 1-8.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:eurjfi:v:28:y:2022:i:6:p:551-570. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/REJF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.