Reinsurance Counterparty Relationships and Firm Performance In the U.S. Property-Liability Insurance Industry

39 Pages Posted: 31 May 2012

See all articles by J David Cummins

J David Cummins

Temple University - Risk Management & Insurance & Actuarial Science

Zhijian Feng

Independent

Mary A. Weiss

Temple University

Date Written: February 1, 2012

Abstract

This research investigates reinsurance counterparty relationships in U.S. property-liability insurance. Counterparty relationships are measured in terms of reinsurance premiums ceded and reinsurance recoverable on paid and unpaid losses. Multiple regression analysis is used to analyze insurer characteristics that determine reinsurance utilization, exposure, and counterparty concentration. We also analyze the relationship between firm performance and reinsurance utilization. Performance is measured using ROA and ROE as well as frontier efficiency scores (cost, revenue, and profit) estimated using data envelopment analysis (DEA). Firm performance is positively related to reinsurance utilization, especially with foreign reinsurers, but performance is adversely related to concentration in reinsurance counterparties.

Keywords: Reinsurance, property-liability insurance, efficiency, data envelopment analysis

JEL Classification: G20, G22, G28

Suggested Citation

Cummins, J. David and Feng, Zhijian and Weiss, Mary A., Reinsurance Counterparty Relationships and Firm Performance In the U.S. Property-Liability Insurance Industry (February 1, 2012). Available at SSRN: https://ssrn.com/abstract=1997444 or http://dx.doi.org/10.2139/ssrn.1997444

J. David Cummins (Contact Author)

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1801 Liacouras Walk.
Philadelphia, PA 19122
United States
215-204-8468 (Phone)
215-204-4712 (Fax)

Zhijian Feng

Independent

Mary A. Weiss

Temple University ( email )

Fox School of Business and Management
1801 Liacouras Walk
Philadelphia, PA 19122
United States
215-204-1916 (Phone)

HOME PAGE: http://www.sbm.temple.edu/~rmidept/weiss.html

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
330
Abstract Views
1,806
rank
101,034
PlumX Metrics