An Examination of Insurance Stock Prices Following the 1989 Loma Prieta Earthquake
This paper examines the reaction of insurance stock prices to the 1 989 Loma Prieta earthquake. Three theories about the perceived future operating performance of insurance companies following the earthquake are tested: (1) substantial cash outflows due to the claims, (2) abandonment of soft-market pricing, and (3) additional net cash inflows as a result of increased earthquake insurance premiums. The analysis employs a two-index market model to control for industry clustering. The findings indicate that market perceived that the effect of the earthquake would be additional earnings for earthquake insurers.
Volume (Year): 16 (1993)
Issue (Month): 1 ()
|Contact details of provider:|| |
When requesting a correction, please mention this item's handle: RePEc:wri:journl:v:16:y:1993:i:1:p:1-15. See general information about how to correct material in RePEc.
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.