A Reexamination of the Corporate Demand for Reinsurance |
| |
| Authors: | Cassandra R Cole Kathleen A McCullough |
| |
| Institution: | Cassandra R. Cole is assistant professor at the College of Business, Room 525 RBA, Florida State University, Tallahassee, FL 32306-1110. Kathleen A. McCullough is assistant professor at the College of Business, Room 150 RBB, Florida State University, Tallahassee, FL 32306-1110. The authors can be contacted via e-mail: and . We would like to gratefully acknowledge the helpful comments of the editors, an anonymous referee, James Carson, David Sommer, Lawrence Powell, and Claude Lilly. Additionally, Kathleen McCullough would like to acknowledge the financial support of the First Year Faculty Award Program at Florida State University. |
| |
| Abstract: | This study examines the effect of the state of the international reinsurance market on the demand for reinsurance by U.S. insurers using data from the years 1993 through 2000. Both the overall demand for reinsurance and the utilization of foreign reinsurance by U.S. insurers are explored. In addition to supporting the findings of prior literature related to the traditional motives for the corporate demand for insurance, evidence indicates that the state of the U.S. reinsurance industry impacts the amount of reinsurance demanded by U.S. insurers. The study also investigates reasons why U.S. insurers utilize a reinsurance program composed of both U.S. and foreign reinsurers. The results indicate that the decision to utilize some percentage of foreign reinsurance is driven primarily by the financial and operational characteristics of the ceding company such as firm size, group affiliation, and organizational form. However, no support is found for the hypothesis that possible differences between the foreign and U.S. reinsurance markets impact the decision to utilize foreign reinsurance. |
| |
| Keywords: | |
|
|
