Prior research on line of business concentration has employed a number of measures, including the often used Hirschman-Herfindahl Index (HHI), which typically does not account for correlation across lines of business. In the first essay of the dissertation, based on the methodology used in modern portfolio theory, I develop a modified version of the HHI that accounts for potential line of business correlation. I test this more refined method using statutory insurance data, and find that the value of the modified HHI differs significantly from the value of the traditional HHI. This shift in concentration is non-linear, and provides greater detail on the diversification decision of firms. I also find that a number of firm characteristics, including size, premium growth, other forms of concentration, and organizational form, significantly affect the difference between the modified and traditional HHI values. Finally, I provide an initial test of the modified HHI using a prior study that employed the traditional HHI. The modified measure alters the results of this study. This dissertaiton has important implications for researchers studying firm concentration related to a variety of firm factors, as well as to insurers considering diversification decisions into independent versus related lines of insurance. Enterprise risk management (ERM) is being implemented more frequently by insurance firms, and regulators and ratings agencies are placing greater emphasis on the effectiveness of firm risk management. The second dissertation essay uses ERM ratings data from Standard and Poor's Ratings Direct combined with the NAIC property and casualty insurance annual statements to identify insurers that do and do not obtain ERM program ratings. I examine which firm characteristics are associated with obtaining an ERM rating, test if ERM rated firms jointly manage firm risk using multiple risk management techniques, and test if ERM rated firms are more resilient to shocks than non rated firms. I find that several firm characteristics are significantly related to an ERM rating, including larger and publicly traded firms. I find that the risk management techniques of ERM rated firms are jointly significant in explaining firm risk, while there is no finding of joint significance for non-ERM rated firms. Finally, I find that firms with an ERM rating experience on average fewer shocks and better performance in the variables that underlie shocks than non-ERM rated firms. I perform ERM tests on a larger sample than most prior research, develop testable hypotheses related to ERM, and provide a structure for future researchers to identify ERM behavior. / A Dissertation submitted to the Department of Risk Management/Insurance, Real Estate, and Legal Studies in partial fulfillment of the requirements for the degree
of Doctor of Philosophy. / Summer Semester, 2012. / June 27, 2012. / correlation, enterprise, insurance, interrelated, management, risk / Includes bibliographical references. / Kathleen A. McCullough, Professor Directing Dissertation; Pamela Coats, University Representative; Patricia Born, Committee Member; Cassandra R. Cole, Committee Member.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_183069 |
| Contributors | Pooser, David M. (authoraut), McCullough, Kathleen A. (professor directing dissertation), Coats, Pamela (university representative), Born, Patricia (committee member), Cole, Cassandra R. (committee member), Department of Risk Management/Insurance, Real Estate and Legal Studies (degree granting department), Florida State University (degree granting institution) |
| Publisher | Florida State University, Florida State University |
| Source Sets | Florida State University |
| Language | English, English |
| Detected Language | English |
| Type | Text, text |
| Format | 1 online resource, computer, application/pdf |
| Rights | This Item is protected by copyright and/or related rights. You are free to use this Item in any way that is permitted by the copyright and related rights legislation that applies to your use. For other uses you need to obtain permission from the rights-holder(s). The copyright in theses and dissertations completed at Florida State University is held by the students who author them. |
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