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The financial impact of the implementation of Solvency II on the Mexican insurance sector

Author

Listed:
  • Nora Gavira-Durón

    (Universidad de las Americas Puebla (UDLAP))

  • Daniel Mayorga-Serna

    (Universidad de las Americas Puebla (UDLAP))

  • Alberto Bagatella-Osorio

    (Universidad de las Americas Puebla (UDLAP))

Abstract

This paper examines the effects of the regulatory changes implemented in the Mexican insurance sector in adjustment to the international regulations of Solvency II imposed by the International Association of Insurance Supervisors. The effect of regulatory changes on the risk and performance levels of foreign entities was analysed and compared with their domestic counterparts. Using a difference-in-difference estimator, significant evidence that foreign insurance companies enhanced their default risk after complying with the law was found. The findings showed that the stability levels of domestic entities were negatively affected. No effect on the performance level for both types of entities was found. This study provides evidence that foreign entities were already prepared for the change in regulation, as opposed to domestic ones, due to their association with their foreign holdings.

Suggested Citation

  • Nora Gavira-Durón & Daniel Mayorga-Serna & Alberto Bagatella-Osorio, 2022. "The financial impact of the implementation of Solvency II on the Mexican insurance sector," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(2), pages 349-374, April.
    • Handle: RePEc:pal:gpprii:v:47:y:2022:i:2:d:10.1057_s41288-020-00196-1
    DOI: 10.1057/s41288-020-00196-1
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Tidong & Cao, Jingsheng, 2023. "Impact of regulatory policy adjustments on insurance company costs and cost efficiency," Finance Research Letters, Elsevier, vol. 58(PD).

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