How do underwriting and investment activities affect P&C insurers’ capital adjustments? Evidence from Canada
研究了加拿大财产与意外险保险公司在1996至2010年间，承保和投资选择如何影响其资本水平及调整速度，发现激进投资和依赖再保险会减缓资本调整，且承保周期和监管压力也起重要作用。
Abstract Using a sample of 83 Canadian property-casualty insurance companies from 1996 to 2010, we examine the impact of underwriting and investment choices on the insurers’ capital level and adjustment speed. An aggressive investment policy (risky equity investments) and a heavy reliance on reinsurance underwriting activities have the opposite effect on insurers’ capital level, though both lead to a slower capital adjustment speed. Meanwhile, insurers reshuffling their underwriting and investments significantly change their capital. With an integrated framework that considers underwriting cycles and regulatory pressure, insurers are slower in their capital adjustments in hard markets of the underwriting cycle, and higher regulatory pressure for an insurer moderates the positive relationship between capital level and adjustment speed.