Abstract
The intra-industry effect of Lloyd's financial distress on publicly traded US insurance companies is examined. Given Lloyd's prominence in the international insurance industry, large losses raised questions about the industry's capacity for certain types of risks and the financial solvency of other insurers. The market value of US property-liability insurers fell significantly at the announcement. This decline is related to the firm's revenues from insurance and reinsurance exposure. Results support contagion between Lloyd's distress and the US insurance industry. The study raises concerns about the potential for a systematic disruption of the supply of reinsurance in the international marketplace.
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