Title

Risk Taking and Performance of Public Insurers: An International Comparison

Abstract

We investigate how investor protection, government quality, and contract enforcement affect risk taking and performance of insurance companies from around the world. We find that better investor protection results in less risk taking, as do higher quality government and greater contract enforceability. However, we find only limited evidence that these factors influence firm performance. We conclude that better overall operating environments result in less risk taking by insurers without the concomitant decline in performance. These results imply that better investor protection environments benefit policyholders and outside stockholders by preventing corporate insiders from expropriating wealth from policyholders and outside stockholders.

Document Type

Article

DOI

https://doi.org/10.1111/j.1539-6975.2012.01479.x

Publication Date

12-1-2012

Journal Title

Journal of Risk and Insurance

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