Corporate Reputation and Financial Performance of Life Insurers

Abstract

This paper analyses empirically the relationship between corporate reputation and the financial performance of life insurers. First, it investigates the factors contributing to the corporate reputation of life insurers and finds that financial strength as well as underwriting service quality are crucial determinants. Second, this study shows that corporate reputation has a significantly positive impact on profitability because it helps to bring in new business and premiums for investment. Third, underwriting and investment constructs of insurance operations are linked to analyse the sources for profitability. Additionally, this paper finds that a sustained reputation may increase profitability over time, because reputation built previously can keep an insurer in a favourable position in future market competition. The empirical findings of this paper suggest that life insurers can improve their profitability through promoting corporate reputation, which highly relies on the service quality of underwriting.