Purpose

This study is designed to investigate how the use of reinsurance affects the primary insurers' profitability and pricing on their insurance products.

Design/methodology/approach

This study examines the impact of reinsurance on the insurers’ profitability using a two stage least square to control the endogeneity problem with a reinsurance variable. The study analyzes 11,894 firm-year observations between 2001 and 2009.

Findings

The study finds that the use of reinsurance in general has a negative impact on property/casualty insurers' performance. However, reinsurance obtained from affiliated firms has a positive impact on profitability, which supports the existence of internal capital markets in the insurance industry.

Research limitations/implications

The finding of study implies that reinsurance transactions are used among affiliated insurers for not only managing underwriting risk and increasing underwriting capacity but also subsidizing capital through internal capital markets. In term of limitation, due to the availability of price data, this study uses only one insurance cycle of 9 years, albeit not weakening the findings.

Practical implications

Especially for non-affiliated insurers, the finding suggests that they need to find an alternative way to transfer underwriting risk without having to use costly reinsurance.

Originality/value

This paper directly investigates the impact of reinsurance utilization on insurers' profitability and pricing.

中文翻译：

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内外部再保险对保险公司业绩和价格的影响

目的

本研究旨在调查再保险的使用如何影响主要保险公司的盈利能力和保险产品的定价。

设计/方法/方法

本研究使用两阶段最小二乘法来控制再保险变量的内生性问题，研究再保险对保险公司盈利能力的影响。该研究分析了 2001 年至 2009 年间的 11,894 个公司年度观察结果。

发现

研究发现，再保险的使用总体上对财产/意外险保险公司的业绩有负面影响。然而，从关联公司获得的再保险对盈利能力有积极影响，这支持了保险业内部资本市场的存在。

研究限制/影响

研究结果表明，附属保险公司之间的再保险交易不仅用于管理承保风险和提高承保能力，还用于通过内部资本市场补贴资本。在局限性方面，由于价格数据的可获得性，本研究仅使用了一个 9 年的保险周期，但并未削弱研究结果。

实际影响

特别是对于非附属保险公司，调查结果表明他们需要找到一种替代方式来转移承保风险，而不必使用昂贵的再保险。

原创性/价值

本文直接研究了再保险利用率对保险公司盈利能力和定价的影响。