Risk and Return Determinants of US Insurers

The International Journal of Business and Finance Research, v. 13 (1) p. 63-72, 2019

10 Pages Posted: 23 Mar 2019

See all articles by Li Zhang

Li Zhang

Saint Cloud State University - G. R. Herberger College of Business

Norma L. Nielson

University of Calgary - Haskayne School of Business

Joseph Haley

St. Cloud State University

Date Written: 2019

Abstract

This paper identifies the risk and risk-adjusted return determinants of US insurers. We find that the significant firm-specific determinants for risk and risk-adjusted return vary slightly for the risk proxy and risk-adjusted return proxy used, and the types of insurers. We find that in general, profitability, leverage, types of management compensation are significantly related to both total risk and systematic risk; in addition, size is positively related to systematic risk. Profitability and incentive pay are significant determinants for total-risk-adjusted return. Size is significantly negatively related to systematic-riskadjusted return. In addition to size, profitability and leverage are significant determinants for systematicrisk-adjusted return for Life insurers.

Keywords: Firm-Specific Risk Determinants, Firm-Specific Risk-Adjusted-Return, Determinants, Insurance Industry, Executive Compensation, Stock Exchange

JEL Classification: G22

Suggested Citation

Zhang, Li and Nielson, Norma L. and Haley, Joseph, Risk and Return Determinants of US Insurers (2019). The International Journal of Business and Finance Research, v. 13 (1) p. 63-72, 2019, Available at SSRN: https://ssrn.com/abstract=3340170

Li Zhang (Contact Author)

Saint Cloud State University - G. R. Herberger College of Business ( email )

St. Cloud, MN 56301
United States

Norma L. Nielson

University of Calgary - Haskayne School of Business ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Joseph Haley

St. Cloud State University ( email )

720 4th Ave S.
St Cloud, MN 56301
United States

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