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Agenda. Why study the determinants of capital? Literature review Data
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1. The determinants of capital in the P&C insurance industryAuthors: Elena Grubisic , Darrell LeadbetterARIA Annual Meeting Quebec City, August 6, 2007
2. Agenda
3. Why the determinants of capital?
4. Canadian P&C industry 2006 data2006 data
5. Federal/provincial supervision 2006 data : 190 + 155 = 3452006 data : 190 + 155 = 345
6. More capital in the industry Last value: 2006Last value: 2006
7. Growing capital & insolvency (Canada) Last value: 2006Last value: 2006
8. Growing capital & insolvency (U.S.) Last value : 2006Last value : 2006
9. The role of capital
10. The role of capital
11. Insurance company capital
12. Insurance company capital
13. International trends
14. Agenda
15. Literature review
16. Determinants of capital
17. Capital allocation/budgeting models
18. Agenda
19. Determinants of capitalization
20. Data & methodology
21. Dependent variables
22. Independent variables
23. Independent variables
24. Agenda
25. Regression results (p-values)
26. Regression results Significance up to 5%Significance up to 5%
27. Regression results Significance up to 5%Significance up to 5%
28. Regression results Significance up to 5%Significance up to 5%
29. Agenda
30. Earnings increase capital
31. Cost of capital - practice
32. Signaling Continuum of opacity:
- asset backed sectors (with secured finances or physical assets) were found to be the least opaque
- those with the most uncertainty (for investors/creditors) in the financial outcome were more opaque (mining ventures, insurance, banking).
Capital reduces the concern of stakeholders about the solvency of a financial institution.Continuum of opacity:
- asset backed sectors (with secured finances or physical assets) were found to be the least opaque
- those with the most uncertainty (for investors/creditors) in the financial outcome were more opaque (mining ventures, insurance, banking).
Capital reduces the concern of stakeholders about the solvency of a financial institution.
33. Observations - regulation
34. Observations - regulation
35. Summary