Journal ArticleDOI
Optimal Capital Utilization by Financial Firms: Evidence from the Property-Liability Insurance Industry
J. David Cummins,Gregory P. Nini +1 more
TLDR
This paper investigated the use of capital by insurers to provide evidence on whether the capital increase represents a legitimate response to changing market conditions or a true inefficiency that leads to performance penalties for insurers.Abstract:
Capitalization levels in the property-liability insurance industry have increased dramatically in recent years—the capital-to-assets ratio rose from 25% in 1989 to 35% by 1999. This paper investigates the use of capital by insurers to provide evidence on whether the capital increase represents a legitimate response to changing market conditions or a true inefficiency that leads to performance penalties for insurers. We estimate “best practice” technical, cost, and revenue frontiers for a sample of insurers over the period 1993–1998, using data envelopment analysis, a non-parametric technique. The results indicate that most insurers significantly over-utilized equity capital during the sample period. Regression analysis provides evidence that capital over-utilization primarily represents an inefficiency for which insurers incur significant revenue penalties.read more
Citations
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Journal ArticleDOI
The determinants of auditor choice and audit pricing among property-liability insurers
TL;DR: In this paper, an endogenous switching model derived from a sample of 2993 US property-liability firm-years for insurers filing required Annual Statements in years 2006 and 2007 was used to examine the audit fee within the context of a specific industry.
Book ChapterDOI
The United States Insurance Market: Characteristics and Trends
Loftin Graham,Xiaoying Xie +1 more
TL;DR: The United States (U.S.) is home to the largest insurance market in the world as mentioned in this paper and over a trillion dollars in premiums written in 2003 (approximately 9.6 percent of gross domestic product (GDP)), insurance operations from the U.S. generated over 35 percent of the worldwide total, a market share in excess of the next four largest countries combined.
Posted Content
Relationship Between Financial Risk and Financial Performance: An Insight of Indian Insurance Industry
Arif Ahmad Wani,Showket Ahmad +1 more
TL;DR: In this paper, the authors investigated the relationship between financial risk and financial performance of insurance companies in India and found that risk management is an important factor which insurance companies must attend to, if they are to achieve financial performance.
Journal ArticleDOI
Effects of corporate diversification on firm performance: evidence from the Serbian insurance industry
TL;DR: In this article, the authors provide empirical evidence on the relation between line-of-business diversification and performance for the insurance companies that operated in the republic of Serbia in the period 2004-2014.
Dissertation
How does the life insurance business perform and behave: the case of the UK industry
TL;DR: In this paper, the authors present a valuation method based on the assumption that policyholders' basic expectation that their saved funds shall be invested with value growth higher than inflation in the real goods market, and take this as the benchmark to assess the reported value of policyholders’ assets.
References
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Journal ArticleDOI
Theory of the firm: Managerial behavior, agency costs and ownership structure
TL;DR: In this article, the authors draw on recent progress in the theory of property rights, agency, and finance to develop a theory of ownership structure for the firm, which casts new light on and has implications for a variety of issues in the professional and popular literature.
Journal ArticleDOI
Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis
TL;DR: The CCR ratio form introduced by Charnes, Cooper and Rhodes, as part of their Data Envelopment Analysis approach, comprehends both technical and scale inefficiencies via the optimal value of the ratio form, as obtained directly from the data without requiring a priori specification of weights and/or explicit delineation of assumed functional forms of relations between inputs and outputs as mentioned in this paper.
Posted Content
Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers
TL;DR: In this paper, the benefits of debt in reducing agency costs of free cash flows, how debt can substitute for dividends, why diversification programs are more likely to generate losses than takeovers or expansion in the same line of business or liquidationmotivated takeovers, and why the factors generating takeover activity in such diverse activities as broadcasting and tobacco are similar to those in oil.
Journal ArticleDOI
Corporate financing and investment decisions when firms have information that investors do not have
TL;DR: In this paper, a firm that must issue common stock to raise cash to undertake a valuable investment opportunity is considered, and an equilibrium model of the issue-invest decision is developed under these assumptions.
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Ownership Structure across Lines of Property-Casualty Insurance
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