When Do International Operations Lead to Improved Performance? An Analysis of Property‐Liability Insurers

15 Pages Posted: 9 Apr 2012

See all articles by Yu-Luen Ma

Yu-Luen Ma

Illinois State University - Katie Insurance School

Dr. B. Elango

Illinois State University - College of Business

Date Written: Spring 2008

Abstract

In recent decades, insurers have been increasing their exposure to international markets. This article seeks to investigate the relationship between property‐liability insurers' international operations and their risk‐adjusted returns using cross‐section and time‐series data for the years 1992 through 2000. Our findings indicate that the relationship between international operations and performance is contingent upon the degree of product diversification. Insurance companies with focused operations in terms of product lines achieve higher risk‐adjusted performance as they increase their exposures to international markets. However, insurers who are highly diversified across product lines face declining returns with greater exposure to international markets.

Suggested Citation

Ma, Yu-Luen and Elango, Dr. B., When Do International Operations Lead to Improved Performance? An Analysis of Property‐Liability Insurers (Spring 2008). Risk Management and Insurance Review, Vol. 11, Issue 1, pp. 141-155, 2008. Available at SSRN: https://ssrn.com/abstract=2036135 or http://dx.doi.org/10.1111/j.1540-6296.2008.00135.x

Yu-Luen Ma (Contact Author)

Illinois State University - Katie Insurance School ( email )

Normal, IL 61790
United States

Dr. B. Elango

Illinois State University - College of Business ( email )

Normal, IL 61761
United States

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