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The University of Southampton
Centre for Risk Research

The Use of Catastrophe Bonds to Optimise Insurers’ Solvency, Capital Structure and Cost of Capital: An Empirical Study Event

Dr Madhu Acharyya
Time:
13:00 - 14:00
Date:
11 October 2016
Venue:
Room 4003, Building 4 (Law), Highfield Campus, University of Southampton

For more information regarding this event, please telephone Dr Ian G.J. Dawson on 02380 598094 or email I.G.Dawson@Soton.ac.uk .

Event details

Dr Madhu Acharyya will present a study that explores the theory of selecting optimal risk capital for insurance companies underwriting catastrophe (Cat) exposures by using insurance linked securities (ILS). İn particular, he will evaluate the relationship between catastrophe bonds with insurers’ solvency and capital reserve, optimal capital allocation and cost of capital. Using GMM panel data analysis and stress testing technique, he computes the extent to which Cat Bonds can absorb catastrophe losses and optimise reinsurers’ risk capital allocation. The results suggest that with specific parameters, catastrophe bonds not only increase insurers’ solvency significantly, but also strengthens insurers’ capital reserves in the longer horizon and reduces their cost of capital. The findings of the study provide the evidence for the use of cat bonds in insurers’ capital allocation decisions to finance catastrophe risks in a cost efficient manner.

Speaker information

Dr Madhu Acharyya,Glasgow Caledonian University (London Campus),Dr Madhu Acharyya is a lecturer in risk management at Glasgow Caledonian University (London Campus). He completed PhD in 2006 on Enterprise Risk Management from the Southampton Business School (then School of Management), University of Southampton under the supervision of Professor Johnnie Johnson. Acharyya is a fellow of the Institute of Risk Management, London and a Chartered Risk & Insurance Manager and Associate of the Chartered Insurance Institute, London. His research focuses on the broader area of risk management including enterprise risk management, operational risk management, corporate risk governance, cyber risk, climate change risk, alternative risk financing and risk literacy. He is experienced in delivering executive education and training for industry professionals in insurance and banking sectors.

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