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Economic crisis and determinants of solvency in the insurance sector: new evidence from Spain
Author(s) -
Moreno Ignacio,
ParradoMartínez Purificación,
TrujilloPonce Antonio
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12422
Subject(s) - solvency , reinsurance , underwriting , panel data , profitability index , context (archaeology) , solvency ratio , life insurance , business , economics , financial crisis , actuarial science , financial system , monetary economics , finance , market liquidity , econometrics , macroeconomics , geography , archaeology
This paper analyses the factors that determine the solvency of insurance companies operating in Spain. The selected time span, from 2008 to 2015, encompasses a period of economic instability characterised by record low interest rates and low or even negative economic growth. Using a dynamic panel data model, we conclude that actual solvency margins are positively related to profitability, underwriting risk and a mutual‐type organisation but inversely related to size, reinsurance use, longer‐tailed business and life insurance specialisation. We also find that less concentrated markets and the context of an economic crisis decrease solvency margins.