Financial Consideration
Market Structure & Competition
Variable Names
HEDGE COSTCAP
PFail
ASSET
LEV ERAGE
LOSSDEV E TAX
STOCK ROA
MarketShare ShortT ailCom
LongT ailCom
ShortT ailP er
LongT ailP er
HerfindahlLine
HerfindahlState
HerfIndLine
HerfIndState
NumIns IndHedging P osSalary P osAgent
P osBroker P osAdver
PosSoftware
ReP rice ReLossDeve ReLiquidity
Descriptions
Premium ceded/Total premium written Rating from A.M. Best
Propensity to fail
Natural log of book value of total assets Book value of total debt/Book value of total assets
One year loss development/Book value of assets
Total income tax/Book value of total as- sets
1 if stock and 0 mutual
Net income/Book value of total assets
Market share by net premium written
Total gross premium on short-tail com- mercial/Total gross premium on all the lines
Total gross premium on long-tail com- mercial/Total gross premium on all the lines
Total gross premium on short-tail per- sonal/Total gross premium on all the lines
Total gross premium on long-tail per- sonal/Total gross premium on all the lines
The measurement of the diversification of the product lines for each insurer
The measurement of the geographic di- versification for each insurer
The measurement of the exposure to the intensity of competition by product lines The measurement of the exposure to the intensity of competition by geography Number of insurers
Median of the industry’s hedging level Positioning based on salary expenses Positioning based on agent expenses Positioning based on broker expenses Positioning based on advertising ex- penses
Positioning based on electronic and soft- ware investment
Net premium written/Incurred losses of reinsurers
Average 1 year loss development for the reinsurers/Book value of total assets Cash and invested assets/Total liability of the reinsurance industry
Categories
Strategy/Conduct
Cost of External Financ- ing/Reputation
Cost of External Financ- ing
Firm Size
Financial Distress and Leverage
Financial Distress and Leverage
Tax
Organizational Form Investment Incentive
Market Position Product Type
Product Type
Product Type
Product Type
Expected Signs
+/- +/-
+/- +/-
+/- + -
- -
+/- +/- +/- +/-
Insurance Specific Effect
Diversification/Competitors +/- Diversification/Competitors +/- Intensity of Competition +/- Intensity of Competition +/-
Intensity of Competition + Intensity of Competition +/- Positioning + Positioning + Positioning + Positioning +
Positioning +
Reinsurance Market’s - Price
Reinsurers’ Strength -
Reinsurers’ Liquidity +