The role of affiliates' external financing and risk-taking in internal capital markets: Evidence from U.S. nonlife insurance groups
Abstract
This study explores how groups source financial support to inadequately capitalized members without compromising group-wide solvency in US nonlife insurance sector. By examining the mediating roles of affiliates’ financial decisions on the effect of focal firms’ inadequate capitalization on internal capital transfers (ICTs), we discover that affiliates raise external capital in response to focal firms’ inadequate capitalization, and affiliates’ increased financial positions via external financing translate into ICTs to focal firms. In conclusion, the present study reveals that affiliates with better financial positions and access to external financing actively source financial resources through external capital issuance in group-wide solvency management.
Fields of Study & Subjects
Insurance and Financial Risk Management
Banking stability
regulation
efficiency
Financial Literacy
Pension
Retirement Analysis
Publication details
- Journal / source
- International Review of Economics & Finance
- Publisher
- Elsevier BV
- Volume
- 106
- Pages
- 105053–105053
- Publication date
- 25 February 2026
- Language
- EN