This study investigates the relationship between firm growth and profitability in the U.S. insurance industry, with a focus on differences between stock and mutual insurers. While both forms address stakeholder incentive conflicts, they differ in ownership structure, capital access, and risk preferences. Mutual insurers, owned by policyholders, prioritize long-term stability and operate with limited financial flexibility. In contrast, stock insurers, driven by shareholder interests, have greater access to capital markets and may pursue riskier strategies to boost profitability. Although prior research on profit persistence (POP) in banking and other industries has explored the role of competition, information asymmetry, and firm-specific factors, limited attention has been given to the insurance sector—particularly regarding ownership structure. This study addresses this gap by examining how financial performance and strategic priorities vary between stock and mutual insurers, offering new insights into the determinants of profitability and growth in the insurance industry.
Choi et al. (Wed,) studied this question.