Intangible Assets and Firm Asset Risk Taking: An Analysis of Property and Liability Insurance Firms

Intangible assets facilitate insurers' capacity to retain existing business and attract new clients. In this study we analyze how the incentives to protect intangible assets affect asset risk‐taking behavior of property and liability insurers. The result supports the view that insurers' in...

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Bibliographic Details
Published in:Risk management and insurance review 2008-03, Vol.11 (1), p.157-178
Main Authors: Yu, Tong, Lin, Bingxuan, Oppenheimer, Henry R., Chen, Xuanjuan
Format: Article
Language:English
Subjects:
Banking
Bond ratings
Hypotheses
Insolvency
Insurance companies
Intangible assets
Investments
Liability insurance
Numerical analysis
Policyholders
Property & casualty insurance
Ratings & rankings
Risk exposure
Risk management
Stocks
Studies
Variables
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Summary:Intangible assets facilitate insurers' capacity to retain existing business and attract new clients. In this study we analyze how the incentives to protect intangible assets affect asset risk‐taking behavior of property and liability insurers. The result supports the view that insurers' incentives to protect their intangible assets lead to an inverse relation between intangible assets and asset risk. Consistent with the view that highly levered firms may go for broke, asset risk of highly levered insurers is less elastic to intangible assets than that of lower‐levered insurers. An additional notable finding of our article is that tangible factors like firm size and capitalization increase insurers' appetites for asset risk taking.
ISSN:1098-1616
1540-6296
DOI:10.1111/j.1540-6296.2008.00136.x