Financial policies on firm performance: The U.S. insurance industry before and after the global financial crisis

In this study, the advanced panel threshold regression model was used to test whether a marginal threshold value representing optimal financial decisions exists respective to the holding ratio of free cash flow, the debt ratio, and the dividend payout ratio determined by the U.S. life and property-casualty insurance industry. The results indicated that an optimal financial policy exists. The findings suggest that the U.S. insurance industry can appropriately increase debt raise based on the optimal ratio, increasing dividend issuance to adjust the free cash flow restricted to the optimal holding ratio, and thus, enhance firm performance and solve financial problems.