Reinsurance and corporate taxation in the United Kingdom life insurance industry

Journal of Banking and Finance

Volumn 32, Issue 1, 2008, Pages 101-115

  Adams, Mike ^a   Hardwick, Philip ^b   Zou, Hong ^c  

^a SWANSEA UNIVERSITY   (United Kingdom)

^b BOURNEMOUTH UNIVERSITY   (United Kingdom)

^c CITY UNIVERSITY OF HONG KONG   (Hong Kong)

Author keywords

Life insurance; Marginal tax rate; Reinsurance; Tax convexity; Taxation; United Kingdom

Indexed keywords

EID: 37549018035     PISSN: 03784266     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jbankfin.2007.09.006     Document Type: Article

References (69)

1. Adams M.B. The reinsurance decision in life insurance firms: An empirical test of the risk-bearing hypothesis. Accounting and Finance 36 (1996) 15-30
2. Adams M.B., and Scott C.N.W. Realistic reporting of life insurance company policy liabilities and profits: Developments in Anglo-American countries. Journal of the Institute of Actuaries 121 (1994) 441-458
3. Adams M.B., and Hillier D.J. The effect of captive insurer formation on stock returns: An empirical test from the UK. Journal of Banking and Finance 24 (2000) 1787-1807
4. Adiel R. Reinsurance and the management of regulatory ratios and taxes in the property-casualty insurance industry. Journal of Accounting and Economics 22 (1996) 207-240
5. Association of British Insurers, 2001. Insurance trends: Quarterly statistics and research review. ABI: London.
6. Barton J. Does the use of financial derivatives affect earnings management decisions?. Accounting Review 76 (2001) 1-26
7. Beatty A., Chamberlain S.L., and Maglio J. Managing financial reports of commercial banks: The influence of taxes, regulatory capital and earnings. Journal of Accounting Research 33 (1995) 231-261
8. Beatty A., Ke B., and Petroni K.R. Earnings management to avoid earnings declines across publicly and privately held banks. Accounting Review 77 (2002) 547-570
9. Berger L.A., Cummins J.D., and Tennyson S. Reinsurance and the liability insurance crisis. Journal of Risk and Uncertainty 5 (1992) 253-272
10. Carter R.L. Reinsurance (1995), Mercantile and General/Reactions Publishing, London
11. Chen P., and Daley L. Regulatory capital and earnings management effects on loan loss accruals in the Canadian banking industry. Contemporary Accounting Research 13 (1996) 91-128
12. Cummins J.D., and Grace E. Tax management and investment strategies of property-liability insurers. Journal of Banking and Finance 18 (1994) 43-72
13. Derrig R.A., and Ostaszewski K.M. Managing the tax liability of a property-liability insurance company. Journal of Risk and Insurance 64 (1997) 695-711
14. Dionne G., and Garand M. Risk management determinants affecting firms' values in the gold mining industry: new empirical evidence. Economics Letters 79 (2003) 43-52
15. Doherty N.A. Integrated Risk Management (2000), McGraw Hill, NY
16. Finance Act (UK) 1989. London: HMSO.
17. Froot K.A., Scharfstein D.S., and Stein J.C. Risk management: Coordinating corporate investment and financing policies. Journal of Finance 48 (1993) 1629-1658
18. Garven J.R. Limited liability and asymmetric taxes for property-liability insurance companies. Journal of Risk and Insurance 59 (1992) 34-56
19. Garven J.R., and Louberge H. Reinsurance, taxes, and efficiency: A contingent claims model of insurance market equilibrium. Journal of Financial Intermediation 5 (1996) 74-93
20. Garven J.R., and Lamm-Tennant J. Economic and financial perspectives on the demand for reinsurance. In: Golden N. (Ed). Rational Reinsurance Buying (2003), Risk Publications, London 163-185 (Chapter 10)
21. Garven J.R., and Lamm-Tennant J. The demand for reinsurance: Theory and empirical tests. Insurance and Risk Management 71 (2003) 217-238
22. Gaver J.J., and Paterson J.S. Managing insurance company financial statements to meet regulatory and tax reporting goals. Contemporary Accounting Research 16 (1999) 207-241
23. Gaver J.J., and Pottier S.W. The role of holding company financial information in the insurer-rating process: Evidence from the property-liability industry. Journal of Risk and Insurance 72 (2005) 77-103
24. Givoly D., Hayn C., Ofer A.R., and Sarig O. Taxes and capital structure: Evidence from firms' response to the Tax Reform Act of 1986. Review of Financial Studies 5 (1992) 331-355
25. Gompers P., Ishii J., and Metrick A. Corporate governance and equity prices. Quarterly Journal of Economics 2 (2003) 107-155
26. Grace E.V. Property-liability reserve errors: A theoretical and empirical analysis. Journal of Risk and Insurance 57 (1990) 28-45
27. Graham J.R. Debt and the marginal tax rate. Journal of Financial Economics 41 (1996) 41-75
28. Graham J.R. Proxies for the corporate marginal tax rate. Journal of Financial Economics 42 (1996) 187-221
29. Graham J.R. How big are the tax benefits of debt?. Journal of Finance 55 (2000) 1901-1941
30. Graham J.R. Taxes and corporate finance: a review. Review of Financial Studies 16 (2003) 1075-1129
31. Graham J.R., Lemmon M.L., and Schallheim J.S. Debt, leases, taxes, and the endogeneity of corporate tax status. Journal of Finance 53 (1998) 131-162
32. Graham J.R., and Smith C.W. Tax incentives to hedge. Journal of Finance 54 (1999) 2241-2262
33. Graham J.R., and Rogers D.A. Do firms hedge in response to tax incentives?. Journal of Finance 57 (2002) 815-830
34. Green R.C., and Talmor E. The structure and incentive effects of corporate tax liabilities. Journal of Finance 40 (1985) 1095-1114
35. Harrington S.E., and Niehaus G. Capital structure decisions in the insurance industry: Stocks versus mutuals. Journal of Financial Services Research 21 (2002) 145-163
36. Hoerger T.J., Sloan F.A., and Hassan M. Loss volatility, bankruptcy, and the demand for reinsurance. Journal of Risk and Uncertainty 53 (1990) 221-245
37. Huberman G., Mayers D., and Smith C.W. Optimal insurance policy indemnity schedules. Bell Journal of Economics 14 (1983) 425-426
38. Income and Corporation Taxes Act (UK). 1988. London: HMSO.
39. Insurance Companies Act (UK). 1982. London: HMSO.
40. Insurance Companies Regulations (UK). 1994. London: HMSO.
41. Johnson R.E. Reinsurance: Theory, the new applications, and the future. Journal of Risk and Insurance 44 (1977) 55-66
42. Ke B., Petroni K.R., and Shackelford D.A. The impact of state taxes on self-insurance. Journal of Accounting and Economics 30 (2000) 99-122
43. Kennedy P. A Guide to Econometrics (1998), Blackwell, Oxford
44. MacKie-Mason J.K. Do taxes affect corporate financing decisions?. Journal of Finance 45 (1990) 1471-1493
45. Macleod J.S., and Levitt A. Taxation of Insurance Business (1999), Butterworths, London
46. MacMinn R.D. Insurance and corporate risk management. Journal of Risk and Insurance 54 (1987) 658-677
47. Mayers D., and Smith C.W. On the corporate demand for insurance: Evidence from the reinsurance market. Journal of Business 63 (1990) 19-40
48. Mehta S. Taxation in the assessment of profitability of life assurance products and of life office appraisal values. Transactions of the Faculty of Actuaries 43 (1993) 484-553
49. Office for National Statistics (UK) 2002. Economic Trends 1999. London: Office for National Statistics.
50. Petroni K.R. Optimistic reporting in the property-liability insurance industry. Journal of Accounting and Economics 15 (1992) 485-508
51. Petroni K.R., and Shackelford D.A. Taxation, regulation, and the organizational structure of property-casualty insurers. Journal of Accounting and Economics 20 (1995) 229-253
52. Petroni K.R., and Shackelford D.A. Managing annual accounting reports to avoid state taxes: An analysis of property-casualty insurers. Accounting Review 74 (1999) 371-393
53. Petroni K.R., Ryan S.G., and Whalen J.M. Discretionary and non-discretionary revisions of loss reserves by property-casualty insurers: Differential implications for future profitability, risk and market value. Review of Accounting Studies 5 (2000) 95-125
54. Plesko G.A. An evaluation of alternative measures of corporate tax rates. Journal of Accounting and Economics 25 (2003) 201-226
55. Post Magazine Green Book. 2000. The Insurance Directory. London: Timothy Benn.
56. Pottier S.W., and Sommer D.W. Agency theory and life insurer ownership structure. Journal of Risk and Insurance 64 (1997) 529-543
57. Sanders A.J. Securitization and other financial options available to life companies. British Actuarial Journal 6 (2000) 737-800
58. Scholes M.S., Wilson G.P., and Wolfson M.A. Tax planning, regulatory capital planning, and financial reporting strategy for commercial banks. Review of Financial Studies 3 (1990) 625-650
59. Schrand C., and Unal H. Hedging and coordinated risk management: Evidence from thrift conversions. Journal of Finance 53 (1998) 979-1013
60. Shackelford D.A. Earnings, regulatory capital, and tax management: Comments. Journal of Accounting and Economics 22 (1996) 241-247
61. Shevlin T. Estimating corporate marginal tax rates with asymmetric tax treatment of gains and losses. Journal of the American Taxation Association 12 (1990) 51-67
62. Skipper H.D. International Risk and Insurance: An Environmental-Managerial Approach (1998), Irwin/McGraw-Hill, Boston
63. Smith C.W., and Stulz R.M. Optimal hedging policies. Journal of Financial and Quantitative Analysis 19 (1985) 127-140
64. Sole T.C. The puzzle of life office tax. British Actuarial Journal 1 (1995) 79-105
65. Titman S., and Wessels R. The determinants of capital structure choice. Journal of Finance 43 (1988) 1-19
66. Thesys Information Ltd. 2002. 2002 Synthesys Life. London: Thesys.
67. Tufano P. Who manages risk? An empirical examination of risk management practices in the gold mining industry. Journal of Finance 51 (1996) 1097-1137
68. Warner J.B. Bankruptcy costs: Some evidence. Journal of Finance 32 (1977) 337-347
69. Winton A. Costly state verification and multiple investors: The role of seniority. Review of Financial Studies 8 (1995) 91-123