Life Insurer Financial Distress: Classification Models and Empirical Evidence

J. OF RISK AND INSURANCE, Vol. 62 No. 4, December 1995

Posted: 5 May 1998

See all articles by James M. Carson

James M. Carson

University of Georgia

Robert E. Hoyt

University of Georgia - C. Herman and Mary Virginia Terry College of Business

Abstract

This study extends previous research on life insurer insolvency by providing empirical evidence on a large (nonmatched-pair) sample of insurers based on three alternative types of statistical models. The study utilizes 1986 through 1990 data for a sample of insurers that did or did not become financially impaired during 1989 through 1991. Empirical evidence suggests that surplus measures and leverage measures are strong indicators of insurer financial strength; however, no evidence is found for a strong relationship between state minimum capital requirements and insolvency. Classification rates for this study's large sample are generally lower than those found in previous studies examining earlier time periods and using smaller, matched-pair samples.

JEL Classification: G22

Suggested Citation

Carson, James M. and Hoyt, Robert E., Life Insurer Financial Distress: Classification Models and Empirical Evidence. J. OF RISK AND INSURANCE, Vol. 62 No. 4, December 1995. Available at SSRN: https://ssrn.com/abstract=7006

James M. Carson (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

Robert E. Hoyt

University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )

Athens, GA 30602-6255
United States
706-542-4290 (Phone)
706-542-4295 (Fax)

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