Explaining Variation in Risk Across Insurance Companies

Posted: 27 Mar 1999

See all articles by Stephen F. Borde

Stephen F. Borde

University of Central Florida - College of Business Administration

Karen Chambliss

Fl Institute of Technology College of Business

Jeff Madura

Florida Atlantic University - College of Business

Abstract

The purpose of this study is to determine what firm-specific factors affect the risk of insurance companies. Traditional methods used to identify potential failures have been severely criticized. Thus, alternative approaches to risk assessment should be of interst to investors and managers of these companies. Models for measuring the impact of factors on risk are developed and empirically tested. The models employed expain a high proportion of variation in risk levels across companies. The sensitivity of insurance company risk to financial characteristics vary with the variable used as a proxy for risk and the type of insurance company assessed. Given the strong relationships between firm-specific characteristics and company risk, it appears that the risk of insurance companies can be effectively controlled with proper management.

JEL Classification: G00, G10, G11, G12, G22, G29, G30, G39

Suggested Citation

Borde, Stephen F. and Chambliss, Karen and Madura, Jeff, Explaining Variation in Risk Across Insurance Companies. Available at SSRN: https://ssrn.com/abstract=154169

Stephen F. Borde (Contact Author)

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States
407-823-2977 (Phone)
407-823-6676 (Fax)

Karen Chambliss

Fl Institute of Technology College of Business ( email )

150 West University Blvd.
Melbourne, FL 32901-6975
United States
321-674-7169 (Phone)
321-674-8896 (Fax)

Jeff Madura

Florida Atlantic University - College of Business ( email )

University Tower
220 SE 2 Avenue
Fort Lauderdale, FL 33301
United States
(954)762-5632 (Phone)
(954)762-5245 (Fax)

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