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The Influence of Reinsurance on Insurance Companies\' Profitability: Evidence from the Austrian, Croatian and Romanian Insurance Industry

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  • Tomislava Pavic Kramaric
  • Fran Galetic

Abstract

This paper reveals the influence of insurance premiums ceded to reinsurance on insurance companies’ profitability in the 2007-2011 period of the insurance industry in Austria, Croatia and Romania revealing the relationship between the cedants and reinsurers. The analysis conducted using panel analysis shows different results depending on the insurance market being analyzed. Specifically, results of the analysis referring to insurance market in Croatia reveal that insurance companies with higher share of premiums ceded to reinsurance have lower level of profitability measured by ROA indicator. Contrary results were obtained for insurance market in Austria where insurance companies with higher share of premiums ceded to reinsurance reported higher levels of profitability. Moreover, the influence of reinsurance on insurance companies' profitability proved to be insignificant in Romania.

Suggested Citation

  • Tomislava Pavic Kramaric & Fran Galetic, 2013. "The Influence of Reinsurance on Insurance Companies\' Profitability: Evidence from the Austrian, Croatian and Romanian Insurance Industry," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(6), pages 1-7.
    • Handle: RePEc:spt:apfiba:v:3:y:2013:i:6:f:3_6_7
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    Cited by:

    1. Charles Andoh & Susana Adobea Yamoah, 2021. "Reinsurance and Financial Performance of Non-life Insurance Companies in Ghana," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 46(2), pages 161-174, May.

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