Economic Crisis and Determinants of Solvency in the Insurance Sector: New Evidence from Spain

Accounting and Finance, 2020, 60(3), pp. 2965–2994

Posted: 30 Apr 2018 Last revised: 8 Jul 2021

See all articles by Ignacio Moreno

Ignacio Moreno

Universidad Pablo de Olavide

Purificación Parrado-Martínez

Department of Financial Economics & Accounting. University of Jaén (Spain)

Antonio Trujillo‐Ponce

Universidad Pablo de Olavide - Department of Financial Economics & Accounting

Date Written: October 28, 2018

Abstract

This paper analyzes the factors that determine the solvency of the insurance companies operating in Spain. The selected time span, from 2008 to 2015, encompasses a period of economic instability characterized 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 organization but inversely related to size, reinsurance use, longer-tailed business, and life insurance specialization. We also find that less concentrated markets and the context of an economic crisis decrease solvency margins.

Keywords: Insurance, Solvency, Capitalization, Economic Crisis, European Financial System

JEL Classification: G22, G28, G32, G33

Suggested Citation

Moreno, Ignacio and Parrado-Martínez, Purificación and Trujillo-Ponce, Antonio, Economic Crisis and Determinants of Solvency in the Insurance Sector: New Evidence from Spain (October 28, 2018). Accounting and Finance, 2020, 60(3), pp. 2965–2994, Available at SSRN: https://ssrn.com/abstract=3156052 or http://dx.doi.org/10.2139/ssrn.3156052

Ignacio Moreno

Universidad Pablo de Olavide ( email )

Ctra. Utrera, Km.1
Sevilla, Seville 41010
Spain

Purificación Parrado-Martínez

Department of Financial Economics & Accounting. University of Jaén (Spain) ( email )

Paraje Las Lagunillas, s/n
Jaén, Jaén 23071
Spain

Antonio Trujillo-Ponce (Contact Author)

Universidad Pablo de Olavide - Department of Financial Economics & Accounting ( email )

Ctra. Utrera, Km.1
Sevilla, 41013
Spain

HOME PAGE: http://https://www.upo.es/investiga/banef/

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