Estimating the relation between digitalization

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Fritzsch, Simon

Estimating the relation between digitalization / Simon Fritzsch, Philipp Scharner, Gregor Weiß

Sumario: We analyze the relation between digitalization and the market value of US insurance companies. To create a text-based measure that captures the extent to which insurers digitalize, we apply an unsupervised machine learning algorithmLatent Dirichlet Allocationto their annual reports. We show that an increase in digitalization is associated with an increase in market valuations in the insurance sector. In detail, capital market participants seem to reward digitalization efforts of an insurer in the form of higher absolute market capitalizations and market-to-book ratios. Additionally, we provide evidence that the positive relation between digitalization and market valuations is robust to sentiment in the annual reports and the choice of the reference document on digitalization, both being issues of particular importance in text-based analyses

En: The Journal of risk and insurance. - Nueva York : The American Risk and Insurance Association, 1964- = ISSN 0022-4367. - 01/09/2021 Volumen 88 Número 3 - septiembre 2021 , p. 529-567

1. Empresas de seguros . 2. Digitalización . 3. Transformación digital . 4. Estados Unidos . I. Título.