Determinants of Underwriting Fees by New Entrant Banks: Evidence from the Japanese IPO Underwriting Market

This research investigates how banks expand market share after entering the underwriting market by examining the relation between commercial bank equity investments and underwriting fees. First, we find that not only bank underwriters with private information about issuers but also those without private information discount their fees, especially for smaller and riskier firms. This result is robust when using multiple firm‐bank relationship measures or when changing the investing stage. This is consistent with the strategic discount view that predicts that bank underwriters discount fees to expand bank market shares in underwriting markets.     

Mortality risk assessment in the elderly: the utility of delayed word recall

Cognitive impairment is an important predictor of mortality in the elderly. An extended delayed word recall (DWR) is one of the most sensitive tests for cognitive impairment. A mortality study was performed on a population of long-term care insurance applicants aged 70 and older who were underwritten during the years 1995-2003 and who had cognitive testing by DWR. Within this relatively short period of time, individuals with DWR score of 0-5 compared to those with DWR score of 6-10 had a markedly worse mortality outcome overall and also when analyzed by gender, underwriting age, underwriting year or smoking status.     

A Theory of the Demand for Underwriting

We examine the demand for underwriting and its effect on equilibrium in an insurance market in which insureds know their risk type, but insurers do not. Our analysis indicates that a set of policies including one that requires buyers to take an underwriting test can constitute a full coverage Nash equilibrium when perfect classification is possible. We also find that underwriting equilibria, in which low risks obtain greater coverage than they would without underwriting, widely exist in a Wilsonian market with nonmyopic insurers. Our findings provide a potential explanation for why empirical evidence on adverse selection is mixed.     

Underwriting relationships: Information production costs, underwriting fees, and first mover advantage

We study underwriting relationships in the floating rate debt market, where many issuers have a large number of offerings. We find that frequent issuers maintain close relationship with only three to five underwriters and pay significantly less underwriting fees than infrequent issuers. The findings are consistent with the notion that starting an underwriting relationship requires expenses for information production. We also find that an issuer’s first underwriter has a cost advantage over later-comers in competing for the issuer’s business. As a result, the first underwriter wins a larger share of the issuer’s business. JEL Classification G21 · G24     

The Role of IPO Underwriting Syndicates: Pricing, Information Production, and Underwriter Competition

We examine syndicates for 1,638 IPOs from January 1997 through June 2002. We find strong evidence of information production by syndicate members. Offer prices are more likely to be revised in response to information when the syndicate has more underwriters and especially more co‐managers. More co‐managers also result in more analyst coverage and additional market makers following the IPO. Relationships between underwriters are critical in determining the composition of syndicates, perhaps because they mitigate free‐riding and moral hazard problems. While there appear to be benefits to larger syndicates, we discuss several factors that may limit syndicate size.     

On the Benefits of Concurrent Lending and Underwriting

This paper examines whether there are efficiencies that benefit issuers and underwriters when a financial intermediary concurrently lends to an issuer while also underwriting its public securities offering. We find issuers, particularly noninvestment‐grade issuers for whom informational economies of scope are likely to be large, benefit through lower underwriter fees and discounted loan yield spreads. Underwriters, both commercial banks as well as investment banks, engage in concurrent lending and provide price discounts, albeit in different ways. We find concurrent lending helps underwriters build relationships, increasing the probability of receiving current and future business.     

A Model for Coronary Heart Disease and Stroke with Applications to Critical Illness Insurance Underwriting II: Applications

Abstract

In Part I we constructed a model for the development of coronary heart disease (CHD) or stroke that either incorporates, or includes pathways through, the major risk factors of interest when underwriting for critical illness (CI) insurance. In Part II we extend this model to include other critical illnesses, for example, cancers and kidney failure, and describe some applications of the model. In particular, we discuss CI premium ratings for applicants with combinations of some or all of high body mass index, smoking, high blood pressure, high cholesterol, and diabetes. We also consider the possible effect on CI premium ratings of genetic conditions that increase the likelihood of high blood pressure, high cholesterol, diabetes, CHD event, or stroke.     

Integration of Lending and Underwriting: Implications of Scope Economies

Informational scope economies provide a cost advantage to universal banks offering “one‐stop shopping” for lending and underwriting that enables them to “lock in” their clients' subsequent business. This market power reduces universal banks' incentive, relative to that of specialized investment banks, to apply costly underwriting efforts; consequently, universal banks are less successful in selling their clients' securities. Our results suggest that an integrated financial services market is less innovative than one with specialized intermediaries. Our analysis also identifies economy, intermediary, and firm characteristics that motivate either the integration or segmentation of bank lending and underwriting.     

Cycles,determinism and persistence in agent-based games and financial time-series: part II

The present article constitutes part II of a series of two reports in which we study the decomposition of synthetic and real financial time-series into a superposition of weighted Hamiltonian cycles on graphs. Part II further analyses the cycle-decomposition method introduced in part I for the Minority Game (MG), the Majority Game (MAJG) and the Dollar Game ($G), in order to gain insight into the ‘illusion of control’ that certain of these games demonstrate, i.e. the fact that the strategies outperform the agents that deploy them. We also illustrate both numerical and analytical methods for extracting cycles from a given time-series and apply the method to a number of different real-world data sets, in conjunction with an analysis of persistence.     

Underwriting Syndicates and the Cost of Debt: Evidence from Chinese Corporate Bonds

This article examines the association between underwriting syndicates and the cost of debt based on a sample of Chinese corporate bonds during 2007–2013. We find strong evidence that there is a negative relationship between forming underwriting syndicates and the cost of debt. The cost of bonds is more likely to decrease when the syndicate has more members—specifically, more joint managers. Additionally, by measuring the information asymmetry using several methods, we observe that this negative relationship is more pronounced when the information asymmetry between issuers and bond investors is more serious. The above results are robust after controlling for the potential endogeneity by constructing instrumental variables based on the unique setting of China’s corporate bond market.     

Evaluation of incidental findings on MRI of the central nervous system: part II

During the course of routine neuroradiologic imaging evaluation, various abnormalities are occasionally identified that may be considered "incidental findings." The significance of these is not always clear, and additional evaluation may be necessary. Part 2 presents an additional series of magnetic resonance (MR) images to illustrate several "incidental findings," describe their significance, and discuss where additional evaluation or follow-up may be required.     

核保期间寿险合同成立问题探讨

为解决核保期间投保人与保险人间的合同关系及保险责任承担问题,我国法院逐渐形成了两种不同的见解:一是"拟制同意承保模式",二是"可保型模式"。然而,这两种模式均无法合理地解决保险人之核保权与保险消费者合理期待与诉求的平衡问题。域外的实践表明,无条件临时保险跳出了核保期间寿险合同成立争论的窠臼,其在利益平衡的视野下较好地解决了核保期间保险当事人间的合同关系及风险分担问题,这对我国的保险立法或司法实践具有借鉴意义。     

浅析银行贷款项目评估中的不足

一、银行传统贷款项目评估中的不足 目前,银行在对项目进行贷款评估时,采用的是以现金流贴现为基础的决策方法,主要包括投资回收期法、净现值法和内部收益率法等,我们称之为传统的项目评估. 传统的项目评估方法主要建立在以下的一些基本假设之上:一是不同的企业拥有相同的管理能力和技术水平,都能够顺利地运作项目,项目的好坏是由项目本身决定,与管理人员的素质和水平无关;二是能够准确估价和预期项目在生命期内各年所产生的净现金流,并且能确定相应的贴现率或风险调整贴现率;三是项目在整个生命期内,投资的外部环境不发生预期以外的变化,市场条件和竞争状况严格按预定的方式发展;四是决策者只能采取"刚性"决策,即"现在投资"或"永远不投资";五是不考虑项目无形资产的价值.     

Investment Bank Reputation and the Price and Quality of Underwriting Services

The relation between investment bank reputation and the price and quality of bond underwriting services is studied here. After controlling for endogeneity in issuer–underwriter matching, I find that reputable banks obtain lower yields and charge higher fees, but issuers' net proceeds are higher. These relations are pronounced in the junk‐bond category, in which reputable banks' underwriting criteria are most stringent. These findings suggest that banks' underwriting decisions reflect reputation concerns, and are thus informative of issue quality. They also suggest that economic rents are earned on reputation, and thereby provide continued incentives for underwriters to maintain reputation.     

Underwriting profit margin of P/L insurance in the fuzzy-ICAPM

The ICAPM is used to study the underwriting profit margin of the P/L insurance company, including the insurances of automobile damage, automobile liability and fire, in which the parameters are the symmetric or non-symmetric triangular fuzzy numbers. From the ten-year data of a company in Taiwan we determine the lower and upper limits associated with the various α-level of the fuzzy numbers. Our results show that the best-fitting parameters of the model from our data are the asymmetric triangular fuzzy numbers. The skew factors in each insurance are determined, which could be used to perform the forecasting of the underwriting profit margin. Our results show that the systematic risk in the fuzzy environment (with best-fitting value of skew factor) becomes larger than that in the crisp environment. However, the insurance underwriting leverage and insurance financial leverage in the fuzzy environment are smaller than those in the crisp environment. JEL Classification G22 · G32 The author is grateful to the two anonymous reviewers for The Geneva Risk and Insurance Review for their comments on an earlier version of this paper.     

Impact of Underwriting Cycles on the Solvency of an Insurance Company

Abstract

This paper studies the solvency of an insurance firm in the presence of underwriting cycles. A small or medium-size insurance company with a price-taker position in the market is considered. Its premium income is assumed to obey an autoregressive process with cycles. Specifically, the premium income for a specific calendar year is influenced by the market experience for the last couple years. Under this classical AR(2) dynamics governing the premium income, an explicit expression for the ultimate ruin probability is derived, using a martingale approach, in the lighttailed claims case. Furthermore, the logarithmic asymptotic behavior of the ultimate ruin probability as well as the typical path to ruin are investigated. Then a comparison is made with the classical case where the same company operates on a market without such cycles. Asymptotically, the presence of market cycles is shown to increase the risk for the company. Numerical illustrations are performed on Canadian motor insurance market data and support the theoretical analysis.