How Do Financial Constraints Affect Product Pricing? Evidence from Weather and Life Insurance Premiums

The role of financial conditions in portfolio choices: The case of insurers

“…We also construct an instrumental variable for the reported P&C insurers' underwriting losses, following Ge (2020). Data on damages due to weather events are from Spatial Hazard Events and Losses Database for the United States (SHELDUS).…”

Regulatory Capital and Portfolio Investments: Evidence from Life Insurance Companies

“…This implication is conceptually consistent with the results obtained by Karolyi and Taboada (2015), who document a benign form of regulatory arbitrage in cross-border bank acquisitions. This paper also contributes to the small but growing literature in finance that assess insurance companies' liability risks and financial frictions (Koijen and Yogo (2015, Irresberger and Peng (2017), Ge (2017)). In particular, the "shadow insurance" as first discussed by Koijen and Yogo (2016) is the subset of financial reinsurance vehicles that are both unauthorized by state regulators and unrated by rating agencies.…”

The Role of Financial Conditions in Portfolio Choices: The Case of Insurers

“…Ellul, Jotikasthira, and Lundblad (2011) and Merrill et al (2014) To study the effect of insurers' financial constraints on their investment portfolio, we use P&C insurers' operating losses as shocks that worsen their financial constraints. We construct an instrumental variable for the reported P&C insurers' operating losses, following Ge (2019) level from the first step. We then sum the resulting products over all the states for each insurer, and scale by assets at the end of the previous year, to obtain the instrumental variable.…”