U.S. life insurers’ responses to the financial crisis: a review of the research

Greg Niehaus and Chia-Chun Chiang
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Greg Niehaus: Darla Moore School of Business, University of South Carolina
Chia-Chun Chiang: Darla Moore School of Business, University of South Carolina

Journal of Financial Perspectives, 2017, vol. 4, issue 1, 107-120

Abstract: Understanding how institutions were impacted by the financial crisis and how they responded is important for developing risk management plans that are capable of dealing with potential future crises. This paper therefore examines the impact of the financial crisis on U.S. life insurers and reviews the research on how life insurers responded to the crisis. Most life insurers were not significantly affected by the crisis, but some suffered large operating and investment losses. Regarding responses, the paper distinguishes activities that increased economic capital as well as statutory capital (e.g., cutting dividends and obtaining capital infusions) from activities that increased statutory capital without having a direct positive impact on economic capital (e.g., selling policies at a discount relative to fair value and selling securities at fire sale prices).

Keywords: Financial Crisis; Insurance; Capital Requirements (search for similar items in EconPapers)
JEL-codes: G22 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jofipe:0104

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