REINSURANCE AND FIRM PERFORMANCE IN THE U.S. PROPERTY-LIABILITY INSURANCE INDUSTRY
Genre
Thesis/DissertationDate
2013Author
FENG, ZHIJIANAdvisor
Cummins, J. DavidCommittee member
Weiss, Mary A.Chen, Hua
Mao, Connie X.
Department
Business Administration/Risk Management and InsuranceSubject
BusinessAffiliated Reinsurance
Efficiency
Firm Performance
Foreign Reinsurance
Reinsurance Counterparty Relationships
Unauthorized Reinsurance
Permanent link to this record
http://hdl.handle.net/20.500.12613/1205Metadata
Show full item recordDOI
http://dx.doi.org/10.34944/dspace/1187Abstract
This dissertation investigates the relationships between reinsurance activities and primary insurers' financial performance in U.S. property-liability insurance market from several perspectives. The first essay investigates the relationship between ceding insurer performance and the affiliation, domicile, and authorization of its counterparties. Specifically, we provide empirical evidence that ceding insurer financial performance is positively related to the use of affiliated reinsurance, the use of foreign reinsurance, and the use of affiliated reinsurance that is ceded to the low-tax, lightly-regulated domiciled counterparties; and negatively related to the use of unauthorized reinsurance. These results are consistent with the cost of information asymmetry theory. The second essay investigates reinsurance counterparty relationships in U.S. property-liability insurance. Firm-specific characteristics determinants of counterparty relationships are examined. We also analyze the relationship between firm performance and reinsurance counterparty relationships. We find that concentration in reinsurance counterparties, especially in unaffiliated counterparties, is adversely related to insurer performance due to higher information asymmetry. On the other hand, relationship with foreign counterparties is positive related to performance, suggesting the foreign reinsurers may have a favorable position in terms of tax treatment, specialized service, among other factors.ADA compliance
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