The Impact of Captive Insurance Company on Parent's Long Term Performance and Risk Characteristics.

• Main Authors: Chih-Wei Chao, 趙志偉
• Other Authors: Y. Angela Liu
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/50593648125910591244

博士 === 國立中正大學 === 企業管理研究所 === 99 === This study mainly examines whether the establishment of a captive insurance company can effectively improve the parent’s long term performance and risk characteristics. We employ data of U.S. exchange-listed companies with a captive established in Bermuda between 1960 and 2007. Using matched pairs of firms with and without captive insurance companies, our findings show that the long term performance of the parent is significantly improved due to the establishment of a captive, suggesting such an action provides additional benefit to the parent. Furthermore, firms with a captive prove to have better performance than similar firms without. With regard to risk characteristics, our findings demonstrate that the systematic risk cannot be significantly reduced by establishing a captive, whereas the unsystematic risk of the parent company becomes higher due to captive establishment, implying that the operation of a captive may not be a better choice than using the service of commercial insurance companies in eliminating unsystematic risk.