We analyze the relation between digitalization and the market value of US insurance companies. To create a text-based measure that captures the extent to which insurers digitalize, we apply an unsupervised machine learning algorithm—Latent Dirichlet Allocation—to their annual reports. We show that an increase in digitalization is associated with an increase in market valuations in the insurance sector. In detail, capital market participants seem to reward digitalization efforts of an insurer in the form of higher absolute market capitalizations and market-to-book ratios. Additionally, we provide evidence that the positive relation between digitalization and market valuations is robust to sentiment in the annual reports and the choice of the reference document on digitalization, both being issues of particular importance in text-based analyses.

中文翻译：

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估计数字化与保险公司市场价值之间的关系

我们分析了数字化与美国保险公司市值的关系。为了创建一个基于文本的衡量标准来捕捉保险公司的数字化程度，我们将一种无监督的机器学习算法——潜在狄利克雷分配——应用到他们的年度报告中。我们表明，数字化的增加与保险业市场估值的增加有关。具体而言，资本市场参与者似乎以更高的绝对市值和市净率的形式奖励保险公司的数字化努力。此外，我们提供的证据表明，数字化与市场估值之间的正相关关系对年度报告中的情绪和数字化参考文件的选择是稳健的，这两个问题在基于文本的分析中都是特别重要的问题。