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This paper tests the claim that insurers often engage in risk‐shifting years before the materialization of a failure. It compares the mechanisms of insurance insolvency across different jurisdictions, using a first‐of‐its‐kind international database assembled by the authors, merging individual financial data together with information on impairments over the last 30 years in four of the largest insurance markets in the world (France, Japan, the UK, and the United States). Results show evidence that low profitability is a leading indicator of failures. Further, there is an asymmetry between life insurance, where bond investment is highly significant, and nonlife insurance sectors, where operating inefficiency plays a larger role. Moreover, this paper highlights differences across countries: a stronger reaction to operating inefficiency in nonlife insurance in France and a less positive impact of bond investment in life insurance in Japan. Both results are linked to differences in the functioning of insurance markets. [ABSTRACT FROM AUTHOR]

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