Value added and profitability of the Italian insurance companies: what is that actually matters?

by Leandro D’Aurizio

Abstract

Using firm-level data for the years 2005-2017, the paper reconstructs the Gross Value Added (GVA) for all the Italian insurance companies by adopting the same methodology applied by the Italian National Accounts. After classifying the Italian companies by kind of ownership, it emerges that those controlled by banks (bancassurance companies) have higher levels of per-employee GVA compared to traditional insurance companies, but the opposite result holds when GVA is expressed as a ratio of the premiums. On the other hand, profitability measured with ROE tends to be superior for the bancassurance companies, compared to that of the other insurers. The heterogeneous variables that produce these aggregate results can be used to model insurance companies’ profits with respect to the main positive components of the GVA, controlling for a wide array of conditional factors. The results show that the type of ownership is not significant and that higher profits are mainly associated with superior returns from financial investment.

https://www.ivass.it/pubblicazioni-e-statistiche/pubblicazioni/quaderni/2019/iv12/Quaderno_12.pdf