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Firm Specific Characteristics And Reinsurance – Evidence From Croatian Insurance Companies

Author

Listed:
  • Marijana Curak

    (University of Split)

  • Marija Utrobicic
  • Daniel Kovac

    (AD Plastik d.d. Solin)

Abstract

Reinsurance is the most important method of insurance companies’ actuarial risk management. Insurance companies’ internal factors of the reinsurance demand in the Republic of Croatia are examined in this paper. Random effects panel model was estimated by using the data about internal characteristics of 19 insurers in the period between 2006 and 2011. The results of empirical analysis show that important factors of the insurance companies’ decisions regarding the purchase of reinsurance are leverage, size, return on investment, ownership structure, as well as a share of non-life insurance in total insurance business. Underwriting result and asset volatility do not show statistically significant effect on reinsurance demand in the Croatian insurance market.

Suggested Citation

  • Marijana Curak & Marija Utrobicic & Daniel Kovac, 2014. "Firm Specific Characteristics And Reinsurance – Evidence From Croatian Insurance Companies," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 23(1), pages 29-42, june.
    • Handle: RePEc:avo:emipdu:v:23:y:2014:i:1:p:29-42
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    File URL: https://hrcak.srce.hr/clanak/182444
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    References listed on IDEAS

    as
    1. Lawrence Powell & David Sommer, 2007. "Internal Versus External Capital Markets in the Insurance Industry: The Role of Reinsurance," Journal of Financial Services Research, Springer;Western Finance Association, vol. 31(2), pages 173-188, June.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Jennifer L Wang & Vincent Y Chang & Gene C Lai & Larry Y Tzeng, 2008. "Demutualization and Demand for Reinsurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 33(3), pages 566-584, July.
    4. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    reinsurance; insurance companies; insurers’ internal characteristics;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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