Effects From ESG Scores on P&C Insurance Companies
Sustainability 2023, 15, 12644. https://doi.org/10.3390/su151612644
Posted: 25 Jul 2023 Last revised: 23 Aug 2023
Date Written: July 14, 2023
Abstract
Insurers act as institutional investors and underwriters of risk, therefore improving their own environmental, social, and governance (ESG) performance is important for the transmission of ESG values to all other economic sectors. We analyze ESG scores of worldwide Property and Casualty (P&C) insurers during 2012-2022, and show that more sustainable insurers have high operating leverage, although their combined ratios and z-scores reveal that they are financially stable. Additional results for the US subsample illustrate that stocks issued by sustainable insurers deliver positive excess returns. Overall, these findings suggest that sustainable practices are associated with the ability of insurers to execute business and create value. This is important for insurance managers, investors, and policy makers, as insurers play a prominent role in promoting economic growth and stability.
Keywords: Insurance, ESG, sustainability
JEL Classification: G22, G32
Suggested Citation: Suggested Citation