Reinsurance is a transaction insurance firms use to hedge risk. Existing studies have only investigated the demand for reinsurance. Thus, we do not have direct evidence on whether the use of reinsurance creates value. Our study provides this evidence. We find a positive relation between the use...

Concentration in the U.S. insurance industry's market shares and ownership, coupled with a network interlocking ownership relationships by institutional investors, raise social concerns. Studying the relationship between Tobin's q and corporate governance features of the industry, we fail to...

This article applies the concept of prudence to develop the characteristics of responsible risk modeling practices in the insurance industry. A critical evaluation of the risk modeling process suggests that ethical judgments are emergent rather than static, vague rather than clear, particular...

The existing concepts of risk management face challenges when applied in practice. The perception of risk depends on the observer's cognitive biases and world view which nuance risk related decisions. How an observer decides also depends on the metric used to quantify risk. While there is...

In a word, where information is costly, volatile cash flows create information acquisition costs that reduce value. Thus, managers act to reduce their firm's volatility of cash flow in anticipation of higher value for shareholders. However, when managers reduce the firm's cash flow volatility,...

We construct two potential scenarios to depict the cash flows from the operation of a captive insurer. We then use Monte Carlo simulation to identify conditions that are sustainable in practice and under which captives have a high probability of creating positive shareholder value. We use...

This study finds a negative relation between the use of a board-level risk committee and insurer value. The data are annual observations from 68 publicly traded insurers over years 2016 to 2003. The study examines the impact on value because the arguments favoring the use of a board-level risk...

Some of the largest global insurers are actively pursuing the recently enacted Principles for Sustainable Insurance (PSI). While the concept of sustainability is often associated with a governance design that promotes stakeholder value the PSI do not appear to be a call for stakeholder-focused...

Concentration in the U.S. insurance industry’s market shares and ownership, coupled with a network interlocking ownership relationships by institutional investors, raise social concerns. Studying the relationship between Tobin’s q and corporate governance features of the industry, we fail to...

In this study I investigate for a nonlinear relation between an insurer’s liquidity and its use of reinsurance. I view reinsurance within the context of why publicly traded firms hedge. Within this context, conceptual models of liquidity hedging and related empirical results offer conflicting...