Domestic and foreign insurer corporate bond demand and monetary policy

Marcel Brambeer, Michael Joyce and Alex Kontoghiorghes
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Marcel Brambeer: University of Bonn
Michael Joyce: National Institute of Economic and Social Research
Alex Kontoghiorghes: Bank of England

No 1210, Bank of England Staff Working Paper series from Bank of England

Abstract: UK insurance companies hold a large share of UK corporate bonds, while US insurers are also significant investors in dollar-denominated issues by UK firms. Using a unique security-level dataset combining UK and US regulatory transactions data, we study how UK and US monetary policy shocks affect the demand of life insurers for UK corporate bonds. Employing a panel local projections framework, we find that UK monetary tightening raises domestic insurer demand but reduces foreign demand, counteracting the overall demand impact. US monetary contractions generate similar asymmetries, increasing demand from UK insurers and decreasing it from US insurers. These patterns are consistent with differences in regulation, portfolio allocation incentives, and liability structures across UK and US insurers.

Keywords: International portfolio choice; insurance companies; corporate debt; monetary policy. (search for similar items in EconPapers)
JEL-codes: E44 G11 G15 G23 G30 (search for similar items in EconPapers)
Pages: 59
Date: 2026-10-09
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:023786

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