How does reinsurance and derivatives usage affect financial performance? Evidence from the UK non-life insurance industry

How Does the Use of Derivatives Affect Firms’ Financial Performance in Turkish Non-Life Insurance Industry?

“…It is expected to find that insurers have improved net financial performance and better underwriting performance. In the results, NLR is negative and significant at a 1% level, which is consistent with Shiu (2020).…”

“…Furthermore, insurers with poor results, in particular those which may be engaged in ventures with high estimated investment losses, may, for hedging purposes, participate in derivative contracts and; thereby, be able to monitor the opportunity for underinvestment. Contrarily, insurers typically use derivatives for risk-reducing purposes; those with poor results would prefer to use fewer derivatives and; therefore, assume more risk for higher returns on their own (Shiu, 2020). Furthermore, if hedging techniques for derivatives operate successfully, hedging companies should have improved operational and financial efficacy, which should be reflected in their financial performance.…”

“…Furthermore, Lau (2016) suggest that the use of derivatives leads to higher ROA and ROE, which are key drivers of a company's market value in Malaysia. Contrarily, Shiu (2020) utilize data belonging to UK non-life insurance companies during 1994-2011 just to find that there is no significant relation between derivative usage and financial performance. Said (2011) analyzed the correlation of derivative usage and financial performance in the banking sector in the US with the period from 2002 to 2009 and suggested that there was a positive correlation between bank performance and efficiency with the derivative usage.…”

Diversification of Insurance Companies’ Products as Supporting Infrastructure Development Institutions in Indonesia

“…According to H.-H. Lee and Lee (2012) companies with a high level of dependency on reinsurance often have lower financial performance, compared to those with low dependency. Shiu (2019) reported that insurance companies using more reinsurance tend to have inferior financial performance. This occurs due to the increased opportunity costs that arise from the company's decision to divert premiums earned from customers for reinsurance purposes, rather than using these premiums for investment in more profitable fields, such as stocks, mutual funds, and bonds.…”

Analysis of Financial Performance of Pdams Affected By Environmental Performance and Environmental Accounting with Agency Cost Mediation

“…Balanced scorecard is a way that evaluates factors that affect company performance consisting of perspectives (1) innovation and learning -companies continue to create and enhance company value (2) internal business -the company shows excellence (3) customer perspective -the company analyzes customer satisfaction (4) financial perspective -how companies view financial conditions (Crowther & Aras, 2008). Almost all industries must pay attention to their finances as in Wang's research (2016) where companies must pay attention to corporate social performance (CSP) on financial performance (H. Wang, Lu, Ye, Chau, & Zhang, 2016), the insurance industry in the UK that pays attention to reinsurance of financial performance (Shiu, 2019), the hospital industry that pays attention to corporate social responsibility (CSR) and the quality management of financial performance (Franco, Caroli, Cappa, & Del Chiappa, 2019), the tourism industry that pays attention to CSR towards financial performance (Theodoulidis, Diaz, Crotto, & Rancati, 2017), the energy industry in Brazil that pays attention to financial ratios and clusters to financial performance (Rodrigues & Rodrigues, 2018), the Brazilian textile industry which pays attention to environmental performance on financial (Lucato, Costa, & de Oliveira Neto, 2017), industry banks that pay attention to corporate social performance on financial (Esteban-Sanchez, de la Cuesta-Gonzalez, & Paredes-Gazquez, 2017), the transportation industry that pays attention to corporate political activity (CPA) to financial performance (Brown, 2016), and restaurants that pay attention to CSR to financial performance (Rhou, Singal, & Koh, 2016). Based on this, all industries always pay attention to financial performance associated with various factors that influence it.…”