Two Essays in Finance
Two Essays in Finance

Author: Ward R. Kangas

Publisher: Universal-Publishers

Published: 1997-10

Total Pages: 144

ISBN-13: 1581120044

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Based on data on publicly traded insurance firms, the first essay examines questions about the effect of large catastrophic events on insurance firms. Rather than looking at a single event, thirty catastrophic events were aggregated into quintiles and the cumulative abnormal returns around these events were found to be significantly positive over a 25 day trading window. There is no significant evidence that post-catastrophic stock returns are correlated to the magnitude of the catastrophe. The second essay analyzes the effect of a large land grant university, the University of Illinois, on the State Treasury of Illinois. If the State Treasury were acting as its own agent trying to maximize revenues, would it choose higher education as an investment versus other alternative investments. While it is true the State makes large expenditures for the operations of the University, it is also true that individuals receiving degrees on average receive higher incomes. Taxes or higher incomes offset the cost of operating the University. The study is broken out by the level of student: undergraduate, masters, doctorate, medical professional, and by function of the University. It was found that all levels of education have a positive return not only for the individual, but also for the State Treasury. This is in excess of any non-pecuniary benefits to the State of having a better educated population, or the local taxation effects on the county or city where the campus is located. These returns are found to be higher than other types of investments.

Two Essays in Finance: Market Response to Catastrophic Losses on the Insurance Industry and Return on Investment of a Land Grant University
Two Essays in Finance: Market Response to Catastrophic Losses on the Insurance Industry and Return on Investment of a Land Grant University

Author: Ward Randall Kangas

Publisher:

Published: 1996

Total Pages:

ISBN-13:

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Based on data on publicly traded insurance firms, the first essay examines questions about the effect of large catastrophic events on insurance firms. Rather than looking at a single event, thirty catastrophic events were aggregated into quintiles and the cumulative abnormal returns around these events were found to be significantly positive over a 25 day trading window. There is no significant evidence that post-catastrophic stock returns are correlated to the magnitude of the catastrophe. The second essay analyzes the effect of a large land grant university, the University of Illinois, on the State Treasury of Illinois. If the State Treasury were acting as its own agent trying to maximize revenues, would it choose higher education as an investment versus other alternative investments. While it is true the State makes large expenditures for the operations of the University, it is also true that individuals receiving degrees on average receive higher incomes. Taxes or higher incomes offset the cost of operating the University. The study is broken out by the level of student: undergraduate, masters, doctorate, medical professional, and by function of the University. It was found that all levels of education have a positive return not only for the individual, but also for the State Treasury. This is in excess of any non-pecuniary benefits to the State of having a better educated population, or the local taxation effects on the county or city where the campus is located. These returns are found to be higher than other types of investments.

The Economics of Property-Casualty Insurance
The Economics of Property-Casualty Insurance

Author: David F. Bradford

Publisher: University of Chicago Press

Published: 1998-04-28

Total Pages: 158

ISBN-13: 9780226070261

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The Economics of Property-Casualty Insurance presents new research and findings on key aspects of the economics of the property-casualty insurance industry. The volume explores the industrial organization, regulation, financing, and taxation of this business. The first paper, on external financing and insurance cycles, contains a wealth of information on trends and patterns in the industry's financial structure. The last essay, which compares performance of stock and mutual insurance companies, takes a fresh look at the way a company's organizational structure affects its responses to different economic situations. Two papers focus on rate regulation in the auto insurance industry, and provide broad overviews of the structure and economics of the insurance industry as a whole. Also addressed are the system of regulating insurance companies in the United States, who insures the insurers, and the effects of tax law changes in the 1980s on the prices of insurance policies.

The Financing of Catastrophe Risk
The Financing of Catastrophe Risk

Author: Kenneth A. Froot

Publisher: University of Chicago Press

Published: 2007-12-01

Total Pages: 490

ISBN-13: 0226266257

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Is it possible that the insurance and reinsurance industries cannot handle a major catastrophe? Ten years ago, the notion that the overall cost of a single catastrophic event might exceed $10 billion was unthinkable. With ever increasing property-casualty risks and unabated growth in hazard-prone areas, insurers and reinsurers now envision the possibility of disaster losses of $50 to $100 billion in the United States. Against this backdrop, the capitalization of the insurance and reinsurance industries has become a crucial concern. While it remains unlikely that a single event might entirely bankrupt these industries, a big catastrophe could place firms under severe stress, jeopardizing both policy holders and investors and causing profound ripple effects throughout the U.S. economy. The Financing of Catastrophe Risk assembles an impressive roster of experts from academia and industry to explore the disturbing yet realistic assumption that a large catastrophic event is inevitable. The essays offer tangible means of both reassessing and raising the level of preparedness throughout the insurance and reinsurance industries.

The Financial Crisis Inquiry Report
The Financial Crisis Inquiry Report

Author: Financial Crisis Inquiry Commission

Publisher: Cosimo, Inc.

Published: 2011-05-01

Total Pages: 692

ISBN-13: 1616405414

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The Financial Crisis Inquiry Report, published by the U.S. Government and the Financial Crisis Inquiry Commission in early 2011, is the official government report on the United States financial collapse and the review of major financial institutions that bankrupted and failed, or would have without help from the government. The commission and the report were implemented after Congress passed an act in 2009 to review and prevent fraudulent activity. The report details, among other things, the periods before, during, and after the crisis, what led up to it, and analyses of subprime mortgage lending, credit expansion and banking policies, the collapse of companies like Fannie Mae and Freddie Mac, and the federal bailouts of Lehman and AIG. It also discusses the aftermath of the fallout and our current state. This report should be of interest to anyone concerned about the financial situation in the U.S. and around the world.THE FINANCIAL CRISIS INQUIRY COMMISSION is an independent, bi-partisan, government-appointed panel of 10 people that was created to "examine the causes, domestic and global, of the current financial and economic crisis in the United States." It was established as part of the Fraud Enforcement and Recovery Act of 2009. The commission consisted of private citizens with expertise in economics and finance, banking, housing, market regulation, and consumer protection. They examined and reported on "the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government."News Dissector DANNY SCHECHTER is a journalist, blogger and filmmaker. He has been reporting on economic crises since the 1980's when he was with ABC News. His film In Debt We Trust warned of the economic meltdown in 2006. He has since written three books on the subject including Plunder: Investigating Our Economic Calamity (Cosimo Books, 2008), and The Crime Of Our Time: Why Wall Street Is Not Too Big to Jail (Disinfo Books, 2011), a companion to his latest film Plunder The Crime Of Our Time. He can be reached online at www.newsdissector.com.

The Impact of Catastrophic Events on Insurance Stocks
The Impact of Catastrophic Events on Insurance Stocks

Author: Chen Chen

Publisher:

Published: 2015

Total Pages:

ISBN-13:

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Given the increasing importance of insurance industry in modern societies and the on-going process of financial globalization, this paper aims to document empirically the performance effects of 26 most costly catastrophes on global insurers. In particular, we analyse market value changes of three largest insurance markets in the world, i.e. the US, European and Japanese markets, in response to domestic and foreign catastrophic events to ascertain whether catastrophes have significantly negative value implications for the industry. By employing event study methodology, our findings reveal that on a global scale catastrophes do not evoke significant reactions from insurance sector, implying that the industry as a whole is seen to be able to withstand such unexpected losses. On a regional level our findings regarding each insurance market vary slightly due to market particularities. Yet in general loss exposure and the severity of a catastrophe are documented to influence insurers' response to a catastrophe. Overall the main message delivered in this paper is that catastrophes generally can scarcely impose negative impact on insurance industry in another continent notwithstanding the global presence of many insurers.

The Public Research University
The Public Research University

Author: Darrell R. Lewis

Publisher:

Published: 2003

Total Pages: 272

ISBN-13:

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The Public Research University was written to help frame and stimulate debate on issues surrounding the changes underway within America's public research universities. There is currently a general consensus that most of postsecondary higher education in the United States is under financial stress. Declining public support for public subsidies to higher education and increasing public demand for other forms of public services have contributed to this stress. These declines in resources have resulted in pressures for change in both policies and services. Nowhere have these stresses been stronger than in the public research university. The focus of this study is based on the University of Minnesota, but they are clearly generalizable to most other public research universities.

The Fair Value of Insurance Business
The Fair Value of Insurance Business

Author: Irwin T. Vanderhoof

Publisher: Springer Science & Business Media

Published: 2012-12-06

Total Pages: 327

ISBN-13: 1461546230

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Insurance companies, as well as banks and thrift institutions, have traditionally reported assets and liabilities on the basis of their amortized cost, or book value. But following the turmoil in securities markets due to highly volatile interest rate fluctuations in the 1980s and the early 1990s, and problems caused by inadequate liquidity, in the mid-1990s the Financial Accounting Standards Board (FASB) issued a new ruling calling for financial intermediaries to report the fair, or market, value of most assets. Called FAS 115, this new standard is the first step in the eventual change to valuing all the assets and liabilities belonging to financial intermediaries under the fair value accounting method. Thus, these changes will pose tremendous future implications for three key business measures of a financial intermediary: Solvency: if the fair values of assets and liabilities are out-of-step, then healthy companies may report negative net worth and insolvent companies may appear to be in sound financial condition. Reported Earnings: if the fair values of assets and liabilities are out of step, then reported earnings will not accurately represent the financial operations of the company. Risk Management: FASB recently postponed the implementation of its new rules on accounting for the use of derivatives instruments. However, if the final set of rules for figuring the fair value of derivatives is not carefully crafted, it may be possible that companies prudently hedging their risks are subject to penalties in their financial reports, while companies taking greater risks appear to have less volatile financial performance. Compared to banks and other financial intermediaries, life insurance companies have the longest term and most complex liabilities, and hence the new FASB requirement poses the most severe challenges to the life insurance industry. The lessons learned from the debate among life insurance academics and professionals about how respond to the fair value reporting rule will be instructive to their counterparts in other sectors of the insurance industry, as well as those involved with other financial institutions. Of particular note are the two papers which comprise Part III. The first provides examples of the fair valuing of annuity contracts, while the second offers examples of the fair valuing of term insurance products. As the papers collected in The Fair Value of Insurance Business extend and update some of the issues treated in a previous Salomon Center conference volume, The Fair Value of Insurance Liabilities, this new volume may be viewed as a companion to the earlier book.