IDEAS home Printed from https://ideas.repec.org/a/pal/gpprii/v41y2016i1p161-178.html
   My bibliography  Save this article

Is Reinsurance a Substitute for or a Complement to Derivative Usage? Evidence from the U.K. Non-Life Insurance Industry

Author

Listed:
  • Yung-Ming Shiu

    (Department of Risk Management and Insurance, Risk and Insurance Research Center, College of Commerce, National Chengchi University, 64, Sec. 2, Zhinan Road, Wenshan District, Taipei 11605, Taiwan.)

Abstract

Reinsurance and derivatives are tools in general use by insurers as the means of hedging their respective underwriting and investment risks. The primary aim of this study is to examine the relationship between reinsurance and derivative usage, a relationship which is tested based on a data set on U.K. non-life insurers covering the years 1994–2011. Consistent with the “substitution” hypothesis, we find strong evidence of a tendency among insurers with higher dependence on reinsurance (derivatives) to exhibit less reliance on derivatives (reinsurance). This result lends support to the view that, when making their risk management decisions, managers of such insurers will seek to determine the overall risk exposure of the firm.

Suggested Citation

  • Yung-Ming Shiu, 2016. "Is Reinsurance a Substitute for or a Complement to Derivative Usage? Evidence from the U.K. Non-Life Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(1), pages 161-178, January.
    • Handle: RePEc:pal:gpprii:v:41:y:2016:i:1:p:161-178
    as

    Download full text from publisher

    File URL: http://www.palgrave-journals.com/gpp/journal/v41/n1/pdf/gpp201525a.pdf
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: http://www.palgrave-journals.com/gpp/journal/v41/n1/full/gpp201525a.html
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sana Sheikh & Ali Murad Syed & Syed Sikander Ali Shah, 2018. "Corporate Reinsurance Utilisation and Capital Structure: Evidence from Pakistan Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(2), pages 300-334, April.
    2. Xiaoyi Li & Yung-Ming Shiu, 2021. "Reinsurance, debt capacity and financial flexibility," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(4), pages 664-687, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:gpprii:v:41:y:2016:i:1:p:161-178. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.