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A Comparative Analysis of U.S. Property and Casualty Reinsurers and Insurers

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  • Cassandra R. Cole
  • Kathleen A. McCullough

Abstract

In empirical research related to the property‐casualty insurance industry, studies commonly focus on either insurers or reinsurers. However, in many cases, the definition used to make the distinction between the two groups is often not clearly defined and/or the definition varies across studies. This variation could result in a substantially different group of firms being included or excluded from the study, thereby affecting the empirical results obtained. This study builds upon Chen and Hamwi, who compare the performance of U.S. insurers and reinsurers. The objective of the study is fourfold: (1) to compare the definitions of insurer and reinsurer commonly used in prior research to identify differences, (2) to expand upon the traditional methods of classifying insurers and reinsurers, (3) to compare the individual firm‐level characteristics of insurers and reinsurers to detect potential variation across categories and across definitions, and (4) to analyze the impact of different definitions on the results of multivariate analyses exploring common research questions. The univariate results indicate that there are some variations in the characteristics of the firms based on the categorization of insurers and reinsurers arising from different definitions. In addition, we find that there are significant differences in the regression results when comparing models based on various definitions of reinsurers utilized in prior research and when professional reinsurers and incidental reinsurers are grouped together. As such, it is possible that the definition used to include or exclude reinsurers from the sample can impact the results.

Suggested Citation

  • Cassandra R. Cole & Kathleen A. McCullough, 2008. "A Comparative Analysis of U.S. Property and Casualty Reinsurers and Insurers," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 11(1), pages 179-207, March.
  • Handle: RePEc:bla:rmgtin:v:11:y:2008:i:1:p:179-207
    DOI: j.1540-6296.2008.00137.x
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    File URL: https://doi.org/10.1111/j.1540-6296.2008.00137.x
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    References listed on IDEAS

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    1. Cassandra R. Cole & Kathleen A. McCullough, 2006. "A Reexamination of the Corporate Demand for Reinsurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 73(1), pages 169-192, March.
    2. Mary A. Weiss & Joon‐Hai Chung, 2004. "U.S. Reinsurance Prices, Financial Quality, and Global Capacity," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 71(3), pages 437-467, September.
    3. Cassandra R. Cole & Ryan B. Lee & Kathleen A. McCullough, 2007. "A Test of the Eclectic Paradigm: Evidence From the U.S. Reinsurance Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 74(2), pages 493-522, June.
    4. Beaver, William H. & McNichols, Maureen F. & Nelson, Karen K., 2003. "Management of the loss reserve accrual and the distribution of earnings in the property-casualty insurance industry," Journal of Accounting and Economics, Elsevier, vol. 35(3), pages 347-376, August.
    5. Mayers, David & Smith, Clifford W, Jr, 1990. "On the Corporate Demand for Insurance: Evidence from the Reinsurance Market," The Journal of Business, University of Chicago Press, vol. 63(1), pages 19-40, January.
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    Cited by:

    1. Biener, Christian & Eling, Martin & Jia, Ruo, 2017. "The structure of the global reinsurance market: An analysis of efficiency, scale, and scope," Journal of Banking & Finance, Elsevier, vol. 77(C), pages 213-229.
    2. Biener, Christian & Eling, Martin & Jia, Ruo, 2016. "The Roles of Industry Idiosyncrasy, Cost Efficiency, and Risk in Internationalization: Evidence from the Insurance Industry," Working Papers on Finance 1602, University of St. Gallen, School of Finance.
    3. Silvia Bressan, 2023. "Reinsurance and Sustainability: Evidence from International Insurers," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 13(6), pages 1-8.

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