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Gauging the financial solidity of property casualty insurers
Author(s) -
Haver Walter
Publication year - 1990
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.3970020208
Subject(s) - solvency , underwriting , crash , business , property insurance , financial crisis , finance , insurance industry , actuarial science , liability insurance , economics , casualty insurance , insurance policy , market liquidity , computer science , macroeconomics , programming language
Since 1984, the year in which the last and, some would argue, the worst insurance underwriting cycle “bottomed out,” an average of twenty property casualty companies per year have suffered insolvencies. The House Oversight and Investigative Subcommittee has issued a report that is highly critical of the ways in which the solvency of insurers is regulated by the states, comparing the current situation in the insurance industry to the early period of the S&L crisis. While current solvency regulation may be imperfect, to assert that the insurance industry is on a track towards an S&L style crash is farfetched. This article examines that assertion, and presents indicators that corporate finance people should look for when trying to gauge the solidity of an insurer.