Ibrahym Jaf

For risk analyses not only knowledge about the impact of different types of hazards, but also information about the elements and values at risk is necessary. This article introduces a methodology for a countrywide estimation of asset values for commercial and industrial properties using Germany as an example. It consists of a financial appraisal of asset values on the municipal level and a further disaggregation by means of land use data. Novelties are the distinction of 60 economic activities, the consideration of production site sizes and the application of a dasymetric mapping technique for a sector-specific estimation and disaggregation of asset values. A validation with empirical data confirms the feasibility of the calculation. The resulting maps can be used for loss estimations e.g. in the framework of cost–benefit analyses that aim to evaluate hazard mitigation measures or for portfolio analyses by banks and insurance companies. The approach can be used for other countries if the necessary data is available (mainly in industrialized countries). In any case, it reveals the critical points when estimating commercial and industrial asset values.

This paper examines the relationship between mergers & acquisitions (M & As), diversification and financial performance in the U.S. property-liability insurance industry over the period 1989–2004. The risk-adjusted return on assets (ROA), return on equity (ROE), Z-score and total risk measured by earnings volatility are considered as a relevant indicator of performance. We find that acquirers’ financial performance decreases and earnings volatility increases during the gestation period after the M & As perhaps due to increased frictional costs associated with post-merger integration and agency problems. We find that more focused insurers outperform the product-diversified insurers, implying that the costs of diversification outweigh the benefits. These findings are robust to alternative risk and diversification measures. We also find that marginal increases in commercial line share are associated with higher risk-adjusted profits, but these gains are offset by the extra costs from product diversity when its initial share is low. For insurers initially concentrated in commercial line, a marginal increase in commercial line share is related to higher performance due to positive effects of both direct exposure and indirect focus.