Centro de Documentacion de Fundación MAPFRE - The Impact of peer effects and economic policy-related uncertainty on U.S. life insurers' investment decisions

MAP20210005916

The Impact of peer effects and economic policy-related uncertainty on U.S. life insurers' investment decisions / Chien-Chiang Lee, Chun-Wei Lin, Chi-Chuan Lee

Sumario: This paper examines the impact of peer evaluation and economic policy-related uncertainty on insurers' investment decisions in the U.S. life insurance industry. Using data from 567 U.S. life insurers, we find that U.S. life insurers' investment decisions are significantly positively associated with peer insurers' investment decisions, consistent with the learning peer channel hypothesis. In addition, we find that when the country's economic policy-related uncertainty is higher, insurance firms are more likely to lower their investment, which supports the wait-see hypothesis. We further investigate the effect of government crisis interventions on life insurer investment, considering policy-related uncertainty. The results indicate that liquidity support and nationalisation policies encouraage insurers' investment decisions. We also perform alternative checks to adress endogeneity concerns. The results mostly support our earlier findings. However, the results on the sensitivity of investment to peer effects and policy-related uncertainty vary. The results are robust to controls for various attributes, such as insurer characteristics, peer insurer characteristics economic policy-related uncertainty and government crisis interventions

En: Geneva papers on risk and insurance : issues and practice. - Geneva : The Geneva Association, 1976- = ISSN 1018-5895. - 01/01/2021 Volumen 46 Número 1 - enero 2021 , p. 22-52

1. Seguro de vida . 2. Empresas de seguros . 3. Inversiones . 4. Política económica . 5. Estados Unidos . I. Lin, Chun-Wei . II. Lee, Chi-Chuan . III. Título.