Mike Adams
University of Wales Swansea
Phil Hardwick
University of Bournemouth
Hong Zou
University of Wales Cardiff
Abstract: Using a panel data set and heteroskedasticity robust Generalized Method of Moments (GMM) estimation to account for the dynamics of partial adjustment of tax and possible endogeneity effects, this study tests empirically the tax-reinsurance relation in the UK's life insurance industry. Our results indicate that reinsurance has a negative influence on the tax liability of UK life insurers and as such, appears to be an effective contracting mechanism for tax management. We also find that mutual life insurers have relatively lower tax liabilities than stock life insurers. However, company size, claims, leverage and multinational status do not appear to be important determinants of UK life insurers' tax position. We consider that our results could have important regulatory implications.
Back to Program
