Why do some insurers become systemically relevant?

摘要

Are some insurers relevant for the stability of the financial system? And if yes, what firm fundamentals and aspects ofinsurers’ business models cause them to destabilize an entire financial sector? We find that several insurers did indeedcontribute significantly to the instability of the U.S. financial sector during the recent financial crisis. We empiricallyconfirm that insurers that were most exposed to systemic risk were larger, relied more heavily on non-policyholderliabilities and had higher ratios of investment income to net revenues on average. Contrary to current conjectures ofinsurance regulators, we find that the contribution of insurers to systemic risk is only driven by insurer size.