ESG and Profitability in the Global Insurance Industry

This study examines the relationship between environmental, social, and governance (ESG) criteria and profitability in the global insurance sector from two distinct perspectives. The System GMM analysis measures the associations between ESG criteria and asset profitability. The analysis, conducted using the CRADIS method and weighted by the CRISUS, MAXC, and NMV methods, determines the companies’ multidimensional performance rankings. Thus, the financial outcomes of companies’ sustainability investments are comprehensively revealed. According to the System GMM estimation results, environmental and social variables are negatively associated with asset profitability, whereas the governance variable and return on equity are positively associated with asset profitability. The leverage ratio and firm size are negatively associated with profitability. While asset profitability and return on equity stand out as the most significant factors compared with environmental, social, and governance variables, environmental and social variables have become increasingly prominent in decision-making processes since 2020. According to the NMV method, return on equity is the decisive criterion, whereas the CRISUS-MAXC integrated method identifies return on assets as the decisive criterion; in both methods, the leverage ratio remains variable and has the lowest impact. According to the CRADIS method rankings, Admiral Group and Zurich Insurance were identified as having the highest performance and the lowest volatility. CNA Financial, Great Eastern, and Hanwha Corp were identified as the lowest-performing companies. Sensitivity analysis results indicate that the NMV-CRADIS method is more resilient to changes in weights.