Reinsurance: Subnational, national, and multinational tax motivations

I investigate reinsurance use to manage taxes and regulatory requirements. I contribute to the extant accounting insurance literature investigating subnational and multinational reinsurance tax motivations and regulatory risk-based capital motivations. I exploit a recent statutory footnote disclosure requirement for NOLs and use actual tax NOLs to proxy for firms' tax status. I use a unique setting where I investigate tax motivations as opposed to financial motivations.; I investigate both life and property-liability reinsurance tax motivations. I contribute to the existing property-liability reinsurance literature by distinguishing between affiliate and non-affiliate tax motivations, investigating subnational and multinational tax motivations, and investigating regulatory risk-based capital motivations. The subnational results suggest life and property-liability firms use domestic reinsurers to avoid future income taxes by shifting asset and premium income to low- or no-tax jurisdictions. The national results suggest life and property-liability firms use reinsurance to manage their taxes. My results provide some evidence that life firms manage reserves to qualify for the small company deduction. The regulatory results indicate a trade-off exists between tax and non-tax costs for life firms, but not property-liability firms. I deduce property-liability firms use reserves, rather than reinsurance, to manage their regulatory costs.; Multinational tests provide mixed results. Contrary to my expectations, the life company results suggest a current income effect and regulatory motivation. Regarding property liability firms, results indicate the use of non-affiliate cessions for regulatory purposes. However, the property-liability affiliate cessions confirm my predictions, implying property-liability companies reinsure with foreign affiliates to manage future income taxes. This result is compelling since I do not have information on affiliate ownership percentages or special tax elections.; I contribute to the existing accounting insurance literature since my results confirm subnational, national, and multinational reinsurance tax motivations. My sensitivity analysis suggests my tax variables are more robust than those in the extant accounting literature. The extant insurance literature suggests risk-based capital is not a good predictor of solvency. My results contribute to the insurance literature since they indicate firms use reinsurance to manage risk-based capital, suggesting why risk-based capital is not effective in predicting solvency.