The effect of ceded reinsurance on solvency of primary insurers

Primary insurance companies diversify their underwriting risk and thus improve their financial stability through buying reinsurance contracts. However, excessive use of reinsurance by an insurance company may signal the presence of financial difficulties. In fact, as research shows, a less solvent insurer tends to use more reinsurance because of its inability to raise needed capital in the financial market. Thus, regulators need to pay extra attention to insurers that overly use reinsurance since such behavior could signal an insurer's disproportionately high risk and its eventual probability of insolvency.     

Learning by doing: Cross-border mergers and acquisitions

We rely on organizational learning theory and strategic momentum research to examine the international merger and acquisition (M&A) activities of a sample of S&P 500 firms. We hypothesize that the learning associated with a firm's prior acquisition experience increases the likelihood the firm will engage in subsequent international acquisitions. Results from a sample including company-country level data indicate that both prior domestic acquisitions and international acquisitions influence the likelihood of acquisitions in foreign markets by U.S.-based firms. We also find that prior experience with international acquisitions is more predictive of subsequent international acquisitions than prior domestic acquisition experience. Moreover, we find that the acquisition experience within a host country had a stronger influence on subsequent acquisitions within that country than other prior non-host country international acquisition experiences.     

A Blotto game with Incomplete Information

We consider a Blotto game with Incomplete Information. A pure-strategy symmetric monotonic Bayesian equilibrium is found and its properties are discussed.     

How important is marketing efficiency?

The best practice, key indicator of marketing performance is widely claimed to be Return on Investment (ROI). This paper takes issue both with ROI and the relative level of attention given to marketing efficiency. It argues that achieving integrated marketing and corporate goals is far more important, namely marketing effectiveness. The aim of marketing is the sourcing and harvesting of cash flow the cash flow which is the lifeblood of the business. The intangible asset, brand equity, is the store of created demand not yet converted into sales and needs to be taken into account. Thus marketing differs from other types of expenditure and should be treated accordingly.     

Incorporating Resilience in the Assessment of Inclusive Wealth: An Example from South East Australia

This paper explores the consequences of changes in a system’s resilience on the sustainability of resource allocation decisions, as measured by Inclusive Wealth (IW) (Arrow et al. in Environ Resour Econ 26:647–685, 2003). We incorporate an estimate of resilience in IW by taking account of known or suspected thresholds that can lead to irreversible (or practically irreversible) changes in the productivity and value of assets and hence social welfare. These thresholds allow us to identify policies or projects that may be leading to an increased risk of decline in capital stocks (the wealth of the region). Such risks are not reflected through usual measures of current system performance, e.g. agricultural production. We use the Goulburn-Broken Catchment in south-eastern Australia as a case study to explore the significance and practicality of including resilience in inclusive wealth estimates.     

The cost of warfarin treatment for stroke prevention in patients with non-valvular atrial fibrillation in Mexico from a collective perspective

Aims: To describe the collective costs of vitamin K antagonist (VKA) treatment for stroke prevention in non-valvular atrial fibrillation (NVAF). VKA drug costs are relatively low, but they necessitate frequent international normalized ratio (INR) monitoring. There are currently minimal data describing the economic impact of this in Mexico.

Materials and methods: Cardiologists provided data on their NVAF patients (n?=?400) to quantify direct medical costs (INR testing, appointments, drug costs). A sub-set of patients (n?=?301) completed a patient questionnaire providing data to calculate direct non-medical costs (travel and other expenses for attendance at VKA-associated appointments) and indirect costs (opportunity cost and reduced work productivity associated with VKA treatment).

Results: Estimated annual direct medical costs totaled $753.6 per patient. Annual direct non-medical and indirect costs were USD$149.8 and $132.1, respectively.

Limitations: Recruited patients were those who consulted with a cardiologist during the study period and selected due to inclusion criteria. All had received uninterrupted treatment for 12–24 months. Consequently, the results are not fully generalizable to all VKA treated NVAF patients.

Conclusions: The true cost of VKA treatment cannot be appreciated by a consideration of drug costs alone. Ongoing monitoring appointments incur additional expenses for both patients and the healthcare system.     

Bronchodilator reliever use and its association with the economic and humanistic burden of COPD: a propensity-matched study

Background and aims: Short-acting bronchodilators are normally used as supplemental relief medication for breakthrough symptoms in COPD patients. The objective of this cross-sectional study was to assess if more frequent vs infrequent use of relief medication in maintenance-treated COPD patients, split by the severity dyspnea, was associated with an increase in the overall disease burden.

Methods: A population-based cross-sectional survey (Adelphi DSP) was conducted among patients with COPD in five European countries. Information was collected on demographic and clinical characteristics, reliever inhaler use, dyspnea (mMRC), health status (CAT, EQ-5D), sleep quality (JSEQ) and healthcare resource use including moderate–severe COPD exacerbations, physician visits, COPD medications and other COPD related resources. The humanistic and economic burden was compared between patients with infrequent reliever use (<1 occasion/week) and more frequent use (≥ 1 occasion/week). The association between increased reliever use and economic burden was also examined after matching patients based on propensity-scores balancing demographic and disease burden characteristics.

Results: Among the 1373 COPD patients prescribed a reliever inhaler, 29% reported using reliever medication ≥1 occasion/week. In the unmatched cohort, more frequent reliever use (n?=?377) compared to infrequent use (n?=?996) was linked to poorer health status (CAT: 25.7 vs 20.0; p?p?p?p?p?=?.0001). In the propensity-score matched population, more frequent reliever use was also associated with significantly higher annual costs for COPD management (€5,034 vs €3,705, p?=?.0327) compared to patients with infrequent reliever use.

Conclusion: In moderate-to-severe COPD, more frequent reliever use is associated with increased exacerbation risk and increased management costs.     

NASD Rule 2110 and the VA Linux IPO

On December 9, 1999, VA Linux issued shares to the public and left over $900 million on the table for investors. In the prospectus, the investment banker Credit Suisse First Boston (CSFB) stated it would receive a 7% gross spread as its compensation for underwriting the shares. Yet the SEC alleges some investors paid enormous commissions to CSFB in the form of a kick-back immediately after obtaining the IPO shares. Hence, CSFB had an economic interest in the IPO and there was not a full distribution of shares. This apparent violation of NASD Rule 2110 raises questions as to the credibility of the financial markets.     

Kent H. Hughes. Building the Next American Century: The Past and Future of American Economic Competitiveness. Washington, D.C.: Woodrow Wilson Center Press, 2005. xxiii + 542 pp. ISBN 0-8018-8204-4, $55.00 (cloth); 0-8018-8203-6, $24.95 (paper).

It is paradoxical that the United States, a nation so recentlytriumphant in the Cold War, should be so gripped by anxietyabout its economic future. A burgeoning national debt and ayawning current account deficit, among other pressures, obligeAmericans to question how—and if—the next one hundredyears will bring another "American Century." Into this debatesteps longtime Washington insider Kent H. Hughes, who sets outwith the ambitious agenda of considering "America’s economicfuture and its economic past" while seeking to define a     

British Public Policy and Multinationals during the "Dollar Gap" Era, 1945-1960

This article examines the role of British exchange and importcontrols in stimulating the dramatic increase in overseas (particularlyAmerican) multinationals in Britain from the end of the SecondWorld War to the late 1950s, together with the ways in whichthe government used controls to regulate the foreign directinvestment (FDI) inflow. Exchange controls were both an importantstimulus to inward investment and a powerful and flexible meansof regulating its volume and character. Government was relativelysuccessful in using these powers to maximize the dollar balanceand industrial benefits of FDI to Britain, given initially severedollar and capacity constraints, and in liberalizing policyonce these constraints receded and competition from other FDIhosts intensified.