NERA Economic Consulting
875 N. Michigan Ave
Chicago, IL 60611
Institutional Affiliation: NERA
NBER Working Papers and Publications
|January 1999||Insurer Demand for Catastrophe Reinsurance|
in The Financing of Catastrophe Risk, Kenneth A. Froot, editor
|January 1998||External Financing and Insurance Cycles|
with Deborah J. Lucas
in The Economics of Property-Casualty Insurance, David F. Bradford, editor
|August 1995||External Financing and Insurance Cycles|
with Deborah Lucas: w5229
In this paper we explore the conjecture that the periodic episodes of high prices and constrained supply in the property- casualty industry are the result of temporary capital shortages. We do this by looking for increases in activities aimed at increasing capital at these times: dividend cuts, repurchase cuts, equity issues, and debt issues. We also look for evidence that the costs of raising external capital are unusually high relative to other industries by examining the market price response to security issues. We find that there is some evidence of payout policy changes in the expected direction, and also of an increased volume of debt and equity issues following low capacity periods. However, the total amount of capital obtained by security issues or reduced payouts appears to be ...
Published: Gron, Anne and Deborah Lucas. "External Financing and Insurance Cycles". The Economics of Property-Casualty Insurance. Edited by David F. Bradford, Chicago: The University of Chicago Press, 1998, pp. 5-27.