Insurer Growth Strategies

29 Pages Posted: 17 Dec 2017

See all articles by Andre P. Liebenberg

Andre P. Liebenberg

University of Mississippi - School of Business Administration

Ivonne A. Liebenberg

Date Written: December 2017

Abstract

We study corporate growth strategy within the U.S. property–casualty insurance industry—where firms are required to report uniquely detailed operating information. We present and test two hypotheses related to the manner in which firms choose to grow: the pecking order hypothesis and the managerial discretion hypothesis. Our results imply that insurers follow a general pecking order of growth strategies, where they tend to grow first by entering new states, then by adding new lines of business, and finally through acquisitions. This order is consistent with firms initially choosing to grow in the least costly and complex manner and subsequently choosing more costly and complex methods. We also find evidence in support of the managerial discretion hypothesis as mutual insurers are less likely to choose to grow and, when they do, they tend to select less complex growth methods.

Suggested Citation

Liebenberg, Andre P. and Liebenberg, Ivonne A., Insurer Growth Strategies (December 2017). Risk Management and Insurance Review, Vol. 20, Issue 3, pp. 309-337, 2017, Available at SSRN: https://ssrn.com/abstract=3088287 or http://dx.doi.org/10.1111/rmir.12088

Andre P. Liebenberg

University of Mississippi - School of Business Administration ( email )

PO Box 3986
Oxford, MS 38677
United States

No contact information is available for Ivonne A. Liebenberg

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