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Are non-risk based capital requirements for insurance companies binding?

  • Leo de Haan
  • Jan Kakes

We investigate the capital structure of 350 Dutch insurers during the period 1995-2005. Our main findings are: (1) a small company size, a mutual organisation, high profitability, large equity investments, and being a fire insurer, all contribute to higher solvency margins; (2) minimum solvency requirements from the supervisor are less easy to explain by firm characteristics and do not correlate positively with risk; (3) neither do insurers follow solvency requirements closely; (4) most insurers have surplus capital which, together with a large company size and high profitability, reduces the risk of insolvency.

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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 145.

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Date of creation: Aug 2007
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Handle: RePEc:dnb:dnbwpp:145
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Web page: http://www.dnb.nl/en/

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