The Anticompetitive Effects of Common Ownership in the U.S. Life Insurance Industry

(1)

(2)

(3)

(4)

𝑖

𝐴

𝐵

𝐴

𝐵

𝐴

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

Π

𝑗

= ∑ 𝛾

𝑖𝑗 𝑖

∑ 𝛽

𝑖𝑘

𝜋

𝑘 𝑘

(1)

Π

_𝑗

𝑗 𝑘

𝑖

𝑗 𝜋

𝑘

𝛽

_𝑖𝑘

𝑘

𝑖

𝛾

_𝑖𝑗

𝑗

𝑖

• 𝑂𝑊

𝑗𝑞

= 𝑤

𝑗𝑗,𝑞

𝑗

𝑞

• 𝑅𝑖𝑣𝑊

𝑗𝑞

= ∑ 𝑤

𝑘 𝑘𝑗,𝑞

𝑗

𝑞

𝑤

𝑗𝑗,𝑞

𝑗𝑗, 𝑞

𝑗

𝑞

∑ 𝑤

_𝑘 _{𝑘𝑗,𝑞}

𝑘 ≠ 𝑗

𝑘𝑗, 𝑞

𝑗

𝑞

(15)

(16)

𝑂𝑊

𝑖

= 1 − ∑ 𝑂𝑆𝑠ℎ

𝑖,𝑦 𝑁 𝑦=1

(2)

𝑂𝑆𝑠ℎ

_𝑖,𝑦

𝑅𝑖𝑣𝑊

_𝑖

= ∑(𝑂𝑆𝑠ℎ

_𝑖,𝑦

∗ 𝑃𝑆𝑠ℎ

_𝑖,𝑦

)

𝑁 𝑦=1

(3)

𝑃𝑆𝑠ℎ

_𝑖,𝑦

𝑃𝑆𝑠ℎ

_𝑖,𝑦

=

(𝑂𝑆𝑠ℎ

𝑖,𝑦

∗ 𝑣𝑎𝑙𝑢𝑒

𝑖

)

∑

𝑁

(𝑂𝑆𝑠ℎ

_𝑖,𝑦 𝑖=𝐴

∗ 𝑣𝑎𝑙𝑢𝑒

𝑖

)

(4)

𝑂𝑊

_𝑖

𝑂𝑊

_𝑖

𝑂𝑊

𝑖

𝑃𝑆𝑠ℎ

_𝑖,𝑦

𝑅𝑖𝑣𝑊

_𝑖

𝑅𝑖𝑣𝑊

𝑖

(17)

𝑂𝑊

𝑖

𝑅𝑖𝑣𝑊

𝑖

𝜋

_𝑖

𝑅𝑂𝐴

_𝑖

𝑅𝑂𝐸

_𝑖

𝑁𝑃𝑊

𝑖

𝑇𝑈𝐼

𝑖

𝑇𝑈𝐸

_𝑖

Δ𝜋

_𝑖,𝑡

= 𝛽

₀

+ 𝛽

₁

𝑂𝑊

_𝑖,𝑡

+ 𝛽

₂

𝑅𝑖𝑣𝑊

_𝑖,𝑡

+ 𝛽

₃

𝑣𝑎𝑙𝑢𝑒

_𝑖,𝑡

+ 𝛼

_𝑖

+ 𝑢

_𝑖,𝑡

Δ𝑅𝑂𝐴

𝑖,𝑡

= 𝛽

0

+ 𝛽

1

𝑂𝑊

𝑖,𝑡

+ 𝛽

2

𝑅𝑖𝑣𝑊

𝑖,𝑡

+ 𝛽

3

𝑣𝑎𝑙𝑢𝑒

𝑖,𝑡

+ 𝛼

𝑖

+ 𝑢

𝑖,𝑡

Δ𝑅𝑂𝐸

_𝑖,𝑡

= 𝛽

₀

+ 𝛽

₁

𝑂𝑊

_𝑖,𝑡

+ 𝛽

₂

𝑅𝑖𝑣𝑊

_𝑖,𝑡

+ 𝛽

₃

𝑣𝑎𝑙𝑢𝑒

_𝑖,𝑡

+ 𝛼

_𝑖

+ 𝑢

_𝑖,𝑡

Δ𝐺𝑃𝑊

_𝑖,𝑡

= 𝛽

₀

+ 𝛽

₁

𝑂𝑊

_𝑖,𝑡

+ 𝛽

₂

𝑅𝑖𝑣𝑊

_𝑖,𝑡

+ 𝛽

₃

𝑣𝑎𝑙𝑢𝑒

_𝑖,𝑡

+ 𝛼

_𝑖

+ 𝑢

_𝑖,𝑡

Δ𝑇𝑈𝐼

𝑖,𝑡

= 𝛽

0

+ 𝛽

1

𝑂𝑊

𝑖,𝑡

+ 𝛽

2

𝑅𝑖𝑣𝑊

𝑖,𝑡

+ 𝛽

3

𝑣𝑎𝑙𝑢𝑒

𝑖,𝑡

+ 𝛼

𝑖

+ 𝑢

𝑖,𝑡

Δ𝑇𝑈𝐸

_𝑖,𝑡

= 𝛽

₀

+ 𝛽

₁

𝑂𝑊

_𝑖,𝑡

+ 𝛽

₂

𝑅𝑖𝑣𝑊

_𝑖,𝑡

+ 𝛽

₃

𝑣𝑎𝑙𝑢𝑒

_𝑖,𝑡

+ 𝛼

_𝑖

+ 𝑢

_𝑖,𝑡

(18)

(19)

𝑉𝐼𝐹

𝑀𝑂𝐷

= 1.08

𝑉𝐼𝐹

_{𝑅𝑖𝑣𝑊}

= 1.04 𝑉𝐼𝐹

_{𝑣𝑎𝑙𝑢𝑒}

= 1.27

(20)

(21)

(22)

π

(23)

(24)

(25)

𝑂𝑊 = 1

0 < 𝑂𝑊 < 1

(26)

(27)

(28)

σ σ ρ

(29)

σ σ ρ

(30)

σ σ ρ

(31)

(32)

(33)

(34)

(35)

σ σ ρ

(36)

σ σ ρ σ σ ρ σ

(37)

σ ρ σ σ ρ σ σ

(38)

ρ σ σ ρ σ σ ρ

(39)

(40)

//// INTRO clear all use rawdata xtset i t, yearly describe // Generate transformations

generate logprofit_after_tax = log(profit_after_tax)

generate logROE_profit_before_tax = log(ROE_profit_before_tax) generate logROA_profit_before_tax = log(ROA_profit_before_tax) generate lognet_premiums_written = log(net_premiums_written)

generate logtotal_underwriting_income = log(total_underwriting_income) generate logtotal_underwriting_exp = log(total_underwriting_exp) generate logOWMOD = log(OWMOD)

generate logRivWMOD = log(RivWMOD) generate logvalue = log(value)

generate expprofit_after_tax = (profit_after_tax)^2

generate expROE_profit_before_tax = (ROE_profit_before_tax)^2 generate expROA_profit_before_tax = (ROA_profit_before_tax)^2 generate expnet_premiums_written = (net_premiums_written)^2

generate exptotal_underwriting_income = (total_underwriting_income)^2 generate exptotal_underwriting_exp = (total_underwriting_exp)^2 generate expOWMOD = (OWMOD)^2

generate expRivWMOD = (RivWMOD)^2 generate expvalue = (value)^2 // Generate percentile variables

xtile profit_after_tax_100 = profit_after_tax, nq(100)

xtile ROE_profit_before_tax_100 = ROE_profit_before_tax, nq(100) xtile ROA_profit_before_tax_100 = ROA_profit_before_tax, nq(100) xtile net_premiums_written_100 = net_premiums_written, nq(100)

xtile total_underwriting_income_100 = total_underwriting_income, nq(100) xtile total_underwriting_exp_100 = total_underwriting_exp, nq(100) xtile value_100 = value, nq(100)

xtile OWMOD_100 = OWMOD, nq(100) xtile RivWMOD_100 = RivWMOD, nq(100) // Generate annual change variables

generate profit_after_tax_ch = profit_after_tax/L.profit_after_tax - 1

generate ROE_profit_before_tax_ch = ROE_profit_before_tax/L.ROA_profit_before_tax - 1 generate ROA_profit_before_tax_ch = ROA_profit_before_tax/L.ROA_profit_before_tax - 1 generate net_premiums_written_ch = net_premiums_written/L.net_premiums_written - 1

generate total_underwriting_income_ch = total_underwriting_income/L.total_underwriting_income - 1 generate total_underwriting_exp_ch = total_underwriting_exp/L.total_underwriting_exp - 1

generate OWMOD_ch = OWMOD / L.OWMOD - 1 generate RivWMOD_ch = RivWMOD / L.RivWMOD - 1

(41)

// Generate annual change variables, grouped in percentiles xtile profit_after_tax_ch_100 = profit_after_tax_ch, nq(100)

xtile ROE_profit_before_tax_ch_100 = ROE_profit_before_tax_ch, nq(100) xtile ROA_profit_before_tax_ch_100 = ROA_profit_before_tax_ch, nq(100) xtile net_premiums_written_ch_100 = net_premiums_written_ch, nq(100)

xtile total_underwriting_income_ch_100 = total_underwriting_income_ch, nq(100) xtile total_underwriting_exp_ch_100 = total_underwriting_exp_ch, nq(100) xtile OWMOD_ch_100 = OWMOD_ch, nq(100)

xtile RivWMOD_ch_100 = RivWMOD_ch, nq(100) save data, replace

clear all use data

// Initial summary stats summarize

tabstat i t profit_after_tax ROA_profit_before_tax ROE_profit_before_tax net_premiums_written total_underwriting_income total_underwriting_exp OWMOD RivWMOD value, s(n mean median min max sd) columns(statistics) format(%20.2f)

// Drop outliers on OWMOD and RivWMOD drop if OWMOD<0

drop if OWMOD>1 drop if RivWMOD<0 // Get new summary stats summarize

// Check for correlation: alarming above .60 correlate OWMOD RivWMOD value

// Perform VIF tests reg OWMOD RivWMOD value vif

reg RivWMOD value OWMOD vif

reg value OWMOD RivWMOD vif

//// 1: Effect of absolute values of OW and RivW on growth of profits, revenues and costs // All firm values are in percentiles.

// All dependent variables are annual change variables, either in percentages (A) or in percentiles (B). /// 1.1: Regressions on years 1-6, firm and time fixed effects

(42)

quietly xtreg profit_after_tax_ch OWMOD RivWMOD value_100, fe eststo profita, title(Profit A)

quietly xtreg profit_after_tax_ch_100 OWMOD RivWMOD value_100, fe eststo profitb, title(Profit B)

quietly xtreg ROA_profit_before_tax_ch OWMOD RivWMOD value_100, fe eststo ROAa, title(ROA A)

quietly xtreg ROA_profit_before_tax_ch_100 OWMOD RivWMOD value_100, fe eststo ROAb, title(ROA B)

quietly xtreg ROE_profit_before_tax_ch OWMOD RivWMOD value_100, fe eststo ROEa, title(ROE A)

quietly xtreg ROE_profit_before_tax_ch_100 OWMOD RivWMOD value_100, fe eststo ROEb, title(ROE B)

quietly xtreg net_premiums_written_ch OWMOD RivWMOD value_100, fe eststo NPWa, title(NPW A)

quietly xtreg net_premiums_written_ch_100 OWMOD RivWMOD value_100, fe eststo NPWb, title(NPW B)

quietly xtreg total_underwriting_income_ch OWMOD RivWMOD value_100, fe eststo TUIa, title(TUI A)

quietly xtreg total_underwriting_income_ch_100 OWMOD RivWMOD value_100, fe eststo TUIb, title(TUI B)

quietly xtreg total_underwriting_exp_ch OWMOD RivWMOD value_100, fe eststo TUEa, title(TUE A)

quietly xtreg total_underwriting_exp_ch_100 OWMOD RivWMOD value_100, fe eststo TUEb, title(TUE B)

esttab profita ROAa ROEa NPWa TUIa TUEa

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, replace fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Absolute values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

legend label varlabels(_cons constant) ///

stats(N r2_w r2_b r2_o sigma_u sigma_e rho, fmt(0 5 5 5 5 3 5 2 4) label(N sq_within sq_between R-sq_overall sigma_u sigma_e rho))

esttab profitb ROAb ROEb NPWb TUIb TUEb

esttab profitb ROAb ROEb NPWb TUIb TUEb using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Absolute values of OW and RivW; dependent variables in percentiles) cells(b(star fmt(3)) se(par fmt(2))) ///

(43)

quietly xtreg profit_after_tax_ch OWMOD RivWMOD value_100, re eststo profitar, title(Profit A)

quietly xtreg profit_after_tax_ch_100 OWMOD RivWMOD value_100, re eststo profitbr, title(Profit B)

quietly xtreg ROA_profit_before_tax_ch OWMOD RivWMOD value_100, re eststo ROAar, title(ROA A)

quietly xtreg ROA_profit_before_tax_ch_100 OWMOD RivWMOD value_100, re eststo ROAbr, title(ROA B)

quietly xtreg ROE_profit_before_tax_ch OWMOD RivWMOD value_100, re eststo ROEar, title(ROE A)

quietly xtreg ROE_profit_before_tax_ch_100 OWMOD RivWMOD value_100, re eststo ROEbr, title(ROE B)

quietly xtreg net_premiums_written_ch OWMOD RivWMOD value_100, re eststo NPWar, title(NPW A)

quietly xtreg net_premiums_written_ch_100 OWMOD RivWMOD value_100, re eststo NPWbr, title(NPW B)

quietly xtreg total_underwriting_income_ch OWMOD RivWMOD value_100, re eststo TUIar, title(TUI A)

quietly xtreg total_underwriting_income_ch_100 OWMOD RivWMOD value_100, re eststo TUIbr, title(TUI B)

quietly xtreg total_underwriting_exp_ch OWMOD RivWMOD value_100, re eststo TUEar, title(TUE A)

quietly xtreg total_underwriting_exp_ch_100 OWMOD RivWMOD value_100, re eststo TUEbr, title(TUE B)

// Hausman tests (only part of FE-I-T 1-6) hausman profita profitar

hausman profitb profitbr hausman ROAa ROAar hausman ROAb ROAbr hausman ROEa ROEar hausman ROEb ROEbr hausman NPWa NPWar hausman NPWb NPWbr hausman TUIa TUIar hausman TUIb TUIbr hausman TUEa TUEar hausman TUEb TUEbr eststo clear

(44)

// Drop years 4-6 drop if t>3

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-3; Absolute values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

(45)

eststo clear

/// 1.3: Regressions on years 4-6, firm and time fixed effects // Back to original data

clear all use data

xtset i t, yearly

// Drop outliers on OWMOD and RivWMOD drop if OWMOD<0 drop if OWMOD>1 drop if RivWMOD<0 drop if RivWMOD>1 // Drop years 1-3 drop if t<4

(46)

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 4-6; Absolute values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

eststo clear

/// 1.4: Regressions on years 1-6, only firm fixed effects // Back to original data

clear all use data xtset i

drop if OWMOD>1 drop if RivWMOD<0 drop if RivWMOD>1

(47)

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I 1-6; Absolute values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

esttab profitb ROAb ROEb NPWb TUIb TUEb using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I 1-6; Absolute values of OW and RivW; dependent variables in percentiles) cells(b(star fmt(3)) se(par fmt(2))) ///

eststo clear

//// 2: Effect of percentile values of OW and RivW on growth of profits, revenues and costs // All firm values are in percentiles.

// All dependent variables are annual change variables, either in percentages (A) or in percentiles (B). /// 2.1: Regressions on years 1-6, firm and time fixed effects

// Back to original data clear all

use data

xtset i t, yearly

(48)

quietly xtreg profit_after_tax_ch OWMOD_100 RivWMOD_100 value_100, fe eststo profita, title(Profit A)

quietly xtreg profit_after_tax_ch_100 OWMOD_100 RivWMOD_100 value_100, fe eststo profitb, title(Profit B)

quietly xtreg ROA_profit_before_tax_ch OWMOD_100 RivWMOD_100 value_100, fe eststo ROAa, title(ROA A)

quietly xtreg ROA_profit_before_tax_ch_100 OWMOD_100 RivWMOD_100 value_100, fe eststo ROAb, title(ROA B)

quietly xtreg ROE_profit_before_tax_ch OWMOD_100 RivWMOD_100 value_100, fe eststo ROEa, title(ROE A)

quietly xtreg ROE_profit_before_tax_ch_100 OWMOD_100 RivWMOD_100 value_100, fe eststo ROEb, title(ROE B)

quietly xtreg net_premiums_written_ch OWMOD_100 RivWMOD_100 value_100, fe eststo NPWa, title(NPW A)

quietly xtreg net_premiums_written_ch_100 OWMOD_100 RivWMOD_100 value_100, fe eststo NPWb, title(NPW B)

quietly xtreg total_underwriting_income_ch OWMOD_100 RivWMOD_100 value_100, fe eststo TUIa, title(TUI A)

quietly xtreg total_underwriting_income_ch_100 OWMOD_100 RivWMOD_100 value_100, fe eststo TUIb, title(TUI B)

quietly xtreg total_underwriting_exp_ch OWMOD_100 RivWMOD_100 value_100, fe eststo TUEa, title(TUE A)

quietly xtreg total_underwriting_exp_ch_100 OWMOD_100 RivWMOD_100 value_100, fe eststo TUEb, title(TUE B)

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, replace fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Percentile values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

esttab profitb ROAb ROEb NPWb TUIb TUEb using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Percentile values of OW and RivW; dependent variables in percentiles) cells(b(star fmt(3)) se(par fmt(2))) ///

(49)

// Hausman regressions

quietly xtreg profit_after_tax_ch OWMOD_100 RivWMOD_100 value_100, re eststo profitar, title(Profit A)

quietly xtreg profit_after_tax_ch_100 OWMOD_100 RivWMOD_100 value_100, re eststo profitbr, title(Profit B)

quietly xtreg ROA_profit_before_tax_ch OWMOD_100 RivWMOD_100 value_100, re eststo ROAar, title(ROA A)

quietly xtreg ROA_profit_before_tax_ch_100 OWMOD_100 RivWMOD_100 value_100, re eststo ROAbr, title(ROA B)

quietly xtreg ROE_profit_before_tax_ch OWMOD_100 RivWMOD_100 value_100, re eststo ROEar, title(ROE A)

quietly xtreg ROE_profit_before_tax_ch_100 OWMOD_100 RivWMOD_100 value_100, re eststo ROEbr, title(ROE B)

quietly xtreg net_premiums_written_ch OWMOD_100 RivWMOD_100 value_100, re eststo NPWar, title(NPW A)

quietly xtreg net_premiums_written_ch_100 OWMOD_100 RivWMOD_100 value_100, re eststo NPWbr, title(NPW B)

quietly xtreg total_underwriting_income_ch OWMOD_100 RivWMOD_100 value_100, re eststo TUIar, title(TUI A)

quietly xtreg total_underwriting_income_ch_100 OWMOD_100 RivWMOD_100 value_100, re eststo TUIbr, title(TUI B)

quietly xtreg total_underwriting_exp_ch OWMOD_100 RivWMOD_100 value_100, re eststo TUEar, title(TUE A)

quietly xtreg total_underwriting_exp_ch_100 OWMOD_100 RivWMOD_100 value_100, re eststo TUEbr, title(TUE B)

// Hausman tests (only part of FE-I-T 1-6) hausman profita profitar

hausman profitb profitbr hausman ROAa ROAar hausman ROAb ROAbr hausman ROEa ROEar hausman ROEb ROEbr hausman NPWa NPWar hausman NPWb NPWbr hausman TUIa TUIar hausman TUIb TUIbr hausman TUEa TUEar hausman TUEb TUEbr eststo clear

(50)

/// 2.2: Regressions on years 1-3, firm and time fixed effects // Drop years 4-6

drop if t>3

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-3; Percentile values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

(51)

eststo clear

/// 2.3: Regressions on years 4-6, firm and time fixed effects // Back to original data

clear all use data

xtset i t, yearly

// Drop outliers on OWMOD and RivWMOD drop if OWMOD<0 drop if OWMOD>1 drop if RivWMOD<0 drop if RivWMOD>1 // Drop years 1-3 drop if t<4

(52)

eststo TUEa, title(TUE A)

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 4-6; Percentile values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

eststo clear

/// 2.4: Regressions on years 1-6, only firm fixed effects // Back to original data

clear all use data

xtset i t, yearly

(53)

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I 1-6; Percentile values of OW and RivW; dependent variables in percentages) cells(b(star fmt(3)) se(par fmt(2))) ///

esttab profitb ROAb ROEb NPWb TUIb TUEb using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I 1-6; Percentile values of OW and RivW; dependent variables in percentiles) cells(b(star fmt(3)) se(par fmt(2))) ///

eststo clear

//// 3: Effect of OW and RivW on difference of profits, revenues and costs // All firm values are in percentiles.

// All dependent variables are difference variables, either in absolutes (A) or in percentiles (B). /// 3.1: Regressions on years 1-6, firm and time fixed effects

quietly xtreg D.profit_after_tax OWMOD RivWMOD value_100, fe eststo profita, title(Profit A)

quietly xtreg D.profit_after_tax_100 OWMOD RivWMOD value_100, fe eststo profitb, title(Profit B)

quietly xtreg D.ROA_profit_before_tax OWMOD RivWMOD value_100, fe eststo ROAa, title(ROA A)

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quietly xtreg D.ROA_profit_before_tax_100 OWMOD RivWMOD value_100, fe eststo ROAb, title(ROA B)

quietly xtreg D.ROE_profit_before_tax OWMOD RivWMOD value_100, fe eststo ROEa, title(ROE A)

quietly xtreg D.ROE_profit_before_tax_100 OWMOD RivWMOD value_100, fe eststo ROEb, title(ROE B)

quietly xtreg D.net_premiums_written OWMOD RivWMOD value_100, fe eststo NPWa, title(NPW A)

quietly xtreg D.net_premiums_written_100 OWMOD RivWMOD value_100, fe eststo NPWb, title(NPW B)

quietly xtreg D.total_underwriting_income OWMOD RivWMOD value_100, fe eststo TUIa, title(TUI A)

quietly xtreg D.total_underwriting_income_100 OWMOD RivWMOD value_100, fe eststo TUIb, title(TUI B)

quietly xtreg D.total_underwriting_exp OWMOD RivWMOD value_100, fe eststo TUEa, title(TUE A)

quietly xtreg D.total_underwriting_exp_100 OWMOD RivWMOD value_100, fe eststo TUEb, title(TUE B)

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Absolute values of OW and RivW; dependent variables in differences) cells(b(star fmt(3)) se(par fmt(2))) ///

esttab profitb ROAb ROEb NPWb TUIb TUEb using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Absolute values of OW and RivW; dependent variables in percentiles and differences) cells(b(star fmt(3)) se(par fmt(2))) ///

//// 4: Effect of differences of OW and RivW on differences of profits, revenues and costs // All firm values are in percentiles.

// All dependent variables are difference variables, either in absolutes (A) or in percentiles (B). /// 4.1: Regressions on years 1-6, firm and time fixed effects

quietly xtreg D.profit_after_tax D.OWMOD D.RivWMOD value_100, fe eststo profita, title(Profit A)

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quietly xtreg D.profit_after_tax_100 D.OWMOD D.RivWMOD value_100, fe eststo profitb, title(Profit B)

quietly xtreg D.ROA_profit_before_tax D.OWMOD D.RivWMOD value_100, fe eststo ROAa, title(ROA A)

quietly xtreg D.ROA_profit_before_tax_100 D.OWMOD D.RivWMOD value_100, fe eststo ROAb, title(ROA B)

quietly xtreg D.ROE_profit_before_tax D.OWMOD D.RivWMOD value_100, fe eststo ROEa, title(ROE A)

quietly xtreg D.ROE_profit_before_tax_100 D.OWMOD D.RivWMOD value_100, fe eststo ROEb, title(ROE B)

quietly xtreg D.net_premiums_written D.OWMOD D.RivWMOD value_100, fe eststo NPWa, title(NPW A)

quietly xtreg D.net_premiums_written_100 D.OWMOD D.RivWMOD value_100, fe eststo NPWb, title(NPW B)

quietly xtreg D.total_underwriting_income D.OWMOD D.RivWMOD value_100, fe eststo TUIa, title(TUI A)

quietly xtreg D.total_underwriting_income_100 D.OWMOD D.RivWMOD value_100, fe eststo TUIb, title(TUI B)

quietly xtreg D.total_underwriting_exp D.OWMOD D.RivWMOD value_100, fe eststo TUEa, title(TUE A)

quietly xtreg D.total_underwriting_exp_100 D.OWMOD D.RivWMOD value_100, fe eststo TUEb, title(TUE B)

esttab profita ROAa ROEa NPWa TUIa TUEa using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Difference values of OW and RivW; dependent variables in differences) cells(b(star fmt(3)) se(par fmt(2))) ///

esttab profitb ROAb ROEb NPWb TUIb TUEb using output.rtf, append fonttbl(\f0\fnil\fs20 LM Roman 10; ) varwidth(10) modelwidth(12) title(FE-I-T 1-6; Difference values of OW and RivW; dependent variables in percentiles and differences) cells(b(star fmt(3)) se(par fmt(2))) ///

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clear all use data

xtset i t, yearly

// Drop outliers on OWMOD and RivWMOD drop if OWMOD<0 drop if OWMOD>1 drop if RivWMOD<0 drop if RivWMOD>1 // Load histograms histogram profit_after_tax graph export profit_after_tax.png histogram ROA_profit_before_tax graph export ROA_profit_before_tax.png histogram ROE_profit_before_tax graph export ROE_profit_before_tax.png histogram net_premiums_written

graph export net_premiums_written.png histogram total_underwriting_income graph export total_underwriting_income.png histogram total_underwriting_exp

graph export total_underwriting_exp.png histogram value

graph export value.png histogram OWMOD graph export OWMOD.png histogram RivWMOD graph export RivWMOD.png histogram profit_after_tax_100 graph export profit_after_tax_100.png histogram ROA_profit_before_tax_100 graph export ROA_profit_before_tax_100.png histogram ROE_profit_before_tax_100 graph export ROE_profit_before_tax_100.png histogram net_premiums_written_100

graph export net_premiums_written_100.png histogram total_underwriting_income_100 graph export total_underwriting_income_100.png histogram total_underwriting_exp_100

graph export total_underwriting_exp_100.png histogram value_100

graph export value_100.png histogram OWMOD_100 graph export OWMOD_100.png histogram RivWMOD_100 graph export RivWMOD_100.png histogram profit_after_tax_ch_100 graph export profit_after_tax_ch_100.png histogram ROA_profit_before_tax_ch_100 graph export ROA_profit_before_tax_ch_100.png

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histogram ROE_profit_before_tax_ch_100 graph export ROE_profit_before_tax_ch_100.png histogram net_premiums_written_ch_100

graph export net_premiums_written_ch_100.png histogram total_underwriting_income_ch_100 graph export total_underwriting_income_ch_100.png histogram total_underwriting_exp_ch_100

graph export total_underwriting_exp_ch_100.png histogram OWMOD_ch_100

graph export OWMOD_ch_100.png histogram RivWMOD_ch_100 graph export RivWMOD_ch_100.png scatter profit_after_tax_100 OWMOD

graph export scatter_OWMOD_profit_after_tax_100.png scatter ROA_profit_before_tax_100 OWMOD

graph export scatter_OWMOD_ROA_profit_before_tax_100.png scatter ROE_profit_before_tax_100 OWMOD

graph export scatter_OWMOD_ROE_profit_before_tax_100.png scatter net_premiums_written_100 OWMOD

graph export scatter_OWMOD_net_premiums_written_100.png scatter total_underwriting_income_100 OWMOD

graph export scatter_OWMOD_total_underwriting_income_100.png scatter total_underwriting_exp_100 OWMOD

graph export scatter_OWMOD_total_underwriting_exp_100.png scatter profit_after_tax_100 RivWMOD

graph export scatter_RivWMOD_profit_after_tax_100.png scatter ROA_profit_before_tax_100 RivWMOD

graph export scatter_RivWMOD_ROA_profit_before_tax_100.png scatter ROE_profit_before_tax_100 RivWMOD

graph export scatter_RivWMOD_ROE_profit_before_tax_100.png scatter net_premiums_written_100 RivWMOD

graph export scatter_RivWMOD_net_premiums_written_100.png scatter total_underwriting_income_100 RivWMOD

graph export scatter_RivWMOD_total_underwriting_income_100.png scatter total_underwriting_exp_100 RivWMOD

graph export scatter_RivWMOD_total_underwriting_exp_100.png scatter profit_after_tax_100 OWMOD_100

graph export scatter_OWMOD_100_profit_after_tax_100.png scatter ROA_profit_before_tax_100 OWMOD_100

graph export scatter_OWMOD_100_ROA_profit_before_tax_100.png scatter ROE_profit_before_tax_100 OWMOD_100

graph export scatter_OWMOD_100_ROE_profit_before_tax_100.png scatter net_premiums_written_100 OWMOD_100

graph export scatter_OWMOD_100_net_premiums_written_100.png scatter total_underwriting_income_100 OWMOD_100

graph export scatter_OWMOD_100_total_underwriting_income_100.png scatter total_underwriting_exp_100 OWMOD_100

graph export scatter_OWMOD_100_total_underwriting_exp_100.png scatter profit_after_tax_100 RivWMOD_100

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graph export scatter_RivWMOD_100_profit_after_tax_100.png scatter ROA_profit_before_tax_100 RivWMOD_100

graph export scatter_RivWMOD_100_ROA_profit_before_tax_100.png scatter ROE_profit_before_tax_100 RivWMOD_100

graph export scatter_RivWMOD_100_ROE_profit_before_tax_100.png scatter net_premiums_written_100 RivWMOD_100

graph export scatter_RivWMOD_100_net_premiums_written_100.png scatter total_underwriting_income_100 RivWMOD_100

graph export scatter_RivWMOD_100_total_underwriting_income_100.png scatter total_underwriting_exp_100 RivWMOD_100

graph export scatter_RivWMOD_100_total_underwriting_exp_100.png // Look only at non-private companies

drop if OWMOD == 1

// Get new summary stats for non-private companies summarize

histogram OWMOD_100

graph export OWMOD_100_nonprivate.png histogram RivWMOD_100