engleski

Asset Allocation and Profitability of Croatian Insurers in the Pre-Solvency II Period

Insurance companies allocate their assets conservatively, being guided primarily by the safety principle instead of the profitability principle. Main goal of this paper is to investigate the structure of the investment portfolios of Croatian insurers and to quantify the link between asset allocation and profitability of insurance companies in the period of strict regulation. Econometric analysis includes data from financial statements for the period 2008-2015, which are analyzed using the cluster analysis and panel data analysis. Cluster analysis is employed for classification of insurers according to their investment strategies and its results will help in predicting the changes in asset allocation that financial reregulation will bring. The results of panel data analysis reveal that investing in riskier categories positively affects the business results, while the investment in debt securities does not encourage profit growth. Our analysis contributes to the existing empirical research on the asset allocation-profitability-nexus and will be valuable for assessing the impact of Solvency II regulations.

insurance ; asset allocation ; cluster analysis ; panel data model ; financial regulation

This paper is an extended version of a paper presented at the ICCBIF 2016 Conference held on 20-21 September in Bratislava, Slovakia.