Insurers' Expansion Into Banking: A Look at Operating Returns
AbstractWe investigate whether insurers can improve their operating risk-return profile by adding commercial loans, a banking product, in the traditional insurance product mix. This analysis is important for two reasons. First, the Gramm-Leach-Bliley Act of 1999 allows insurers to buy and operate banks. Second, existing research finds that banks can improve their risk-return profile by adding insurance products, but offers no guidance on whether insurers might benefit from an expansion into banking. We use individual product data to construct insurance-only portfolios of products and insurance-banking portfolios of products. Analysis of portfolio operating returns and their standard deviations indicates that insurer-banks are unlikely to outperform full- line insurers that have carefully selected their product mix. The mere expansion of an insurance firm into banking does not necessarily result in a competitive operating risk- return profile.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Western Risk and Insurance Association in its journal Journal of Insurance Issues.
Volume (Year): 25 (2002)
Issue (Month): 1 ()
Contact details of provider:
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Barrese).
If references are entirely missing, you can add them using this form.