Enterprise Risk Management and Solvency: The Case of the Listed EU Insurers

Duc Khuong Nguyen and Dinh-Tri Vo

No 2021-010, Working Papers from Department of Research, Ipag Business School

Abstract: We investigate the relationship between Enterprise Risk Management (ERM) adoption and solvency for publicly listed insurers in the European Union. Our results, which control for endogeneity problem, show that ERM-adoption insurers experience a decrease in their solvency level, which may trigger their financial vulnerability in the case of unexpected shocks. Firmspecific characteristics such as leverage, ROA, combined-ratio and business type are also found to significantly increase the EU insurers? solvency, whereas the impact of firm size and age is insignificant. Moreover, insurers that have adopted the ERM share the common characteristics of higher performance, higher leverage, bigger size, and more diversified businesses. Finally, the demand of the market is an important factor of ERM adoption and insurance solvency.

Keywords: risk management; ERM; insurance; solvency (search for similar items in EconPapers)
JEL-codes: G22 G31 G34 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2021-01-01
New Economics Papers: this item is included in nep-cfn, nep-ias, nep-ore and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Enterprise risk management and solvency: The case of the listed EU insurers (2020)
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