Since the 20th century, the insurance industry has experienced an unprecedented wave of M&A. However, in spite of the drastic increase in insurance M&A activity, there has been little consistent empirical evidence on the value enhancement of these deals. Hence, many open questions still exist in this research area. The most fundamental questions are whether insurance M&A actually create value and what determinants influence the success of these undertakings. This thesis attempts to find answers to these questions by first examining the status quo of academic literature published in this field of research and bringing together the empirical findings on the success of insurance M&A and its influencing factors. Overall, the literature review outlines that insurance M&A on average tend to create value for shareholders of the target firms as well as for the combined entity of acquirer and target. Moreover, shareholders of acquiring US insurance firms, on average, also benefit from these corporate undertakings. However, negative short-term as well as long-term wealth effects for acquiring insurers’ shareholders are the common finding in capital market studies analyzing the effects of M&A transactions in the European insurance industry. Secondly, the reliability and validity of the findings of previous research are tested in an own empirical analysis which uses a fairly new approach to evaluating the success of M&A by using the idea of stochastic dominance (SD). More precisely, using a sample of 102 transactions conducted by publicly traded Western European insurance firms between the years 1993 and 2009, this work analyzes whether investors in acquiring insurance firms benefit from M&A by comparing return distributions of acquiring firm portfolios with benchmark portfolios using the first two orders of SD. The results show that insurance M&A trigger a negative short-term capital market reaction for acquiring European insurance firms. However, this short-term underperformance diminishes over time, and over a longer period of time of up to three years after M&A announcement, there is no underperformance of acquiring European insurers. In conclusion, based on the accumulated evidence from past empirical studies as well as the empirical investigation of this thesis, it can be concluded that M&A, not only in the US insurance market but also in the European insurance market, seem to be a viable model and are likely to lead to success for all parties involved.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- History of the Consolidation Process and Relevance of the Topic
- Problem Statement and Research Gaps
- Research Objectives and Development of Research Questions
- Organization of the Study
- Theoretical and Methodological Background
- Overview
- Theoretical Foundations
- Growth Options of Insurance Companies
- Definition of the Term Mergers and Acquisitions
- Categorization of M&A
- Phases of the M&A Process
- Overview of M&A Waves
- Methodological Foundations
- Definition of M&A Success
- Traditional Approaches to Testing the Success of M&A
- Financial Statement-Based Approach
- Basic Procedure
- Strengths and Weaknesses of the Measure
- Capital Market-Based Approach
- Basic Procedure
- Strengths and Weaknesses of the Measure
- Retention/Divestment Approach
- Basic Procedure
- Strengths and Weaknesses of the Measure
- Interview and Survey Approach
- Basic Procedure
- Strengths and Weaknesses of the Measure
- Concluding Evaluation of the Approaches
- Literature Review: Prior Research on the Success of Insurance M&A and its Determinants
- Overview
- Overview of Recent Studies
- Selection of Prior Research
- Literature Review Method
- Development of Research Clusters
- Review of Individual Studies on the Overall Success of Insurance M&A by Cluster
- Accounting Ratio Analysis
- Efficiency Analysis
- Linkage of Event and Efficiency Analysis
- Event Analysis
- Summary
- Review and Results of Prior Capital Market Research on the Overall Success of Insurance M&A
- Acquiring Firm Stockholder Returns
- Short-Term Results
- Medium- and Long-Term Results
- Target Firm Stockholder Returns
- Short-Term Results
- Medium- and Long-Term Results
- Total Stockholder Returns of Combined Firms
- Short-Term Results
- Medium- and Long-Term Results
- Comparison of Short-Term and Medium and Long-Term Results
- Summary of the Evidence on the Overall Success of Insurance M&A
- Examining the history of consolidation in the insurance industry and its current relevance
- Analyzing the different theoretical and methodological approaches to define and measure M&A success
- Reviewing prior research on the success of insurance M&A and its determinants, focusing on both accounting-based and capital market-based studies
- Identifying key factors influencing the success of M&A in the insurance industry
- Drawing conclusions and recommendations based on the analysis of prior research
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This dissertation aims to systematically analyze the success of mergers and acquisitions (M&A) in the insurance industry. By examining previous empirical research, the study seeks to identify the factors that influence the success of M&A and provide insights for future transactions.
Zusammenfassung der Kapitel (Chapter Summaries)
The first chapter provides an introduction to the dissertation, outlining the research question, objectives, and organization of the study. Chapter two lays the theoretical and methodological foundations for the analysis, defining M&A and exploring various approaches to measure its success. Chapter three presents a comprehensive literature review, examining previous research on the success of insurance M&A and its determinants. This review includes both accounting-based and capital market-based studies, highlighting the findings and limitations of previous research. The dissertation concludes by discussing the implications of the literature review for future research and practice.
Schlüsselwörter (Keywords)
The study focuses on the success of mergers and acquisitions (M&A) in the insurance industry, examining factors that influence the success of such transactions. Key terms include M&A, insurance industry, consolidation, theoretical and methodological approaches to M&A success, accounting ratio analysis, efficiency analysis, event analysis, capital market-based research, acquiring firm stockholder returns, target firm stockholder returns, and total stockholder returns. The dissertation aims to contribute to the understanding of M&A success in the insurance industry by analyzing previous empirical research and identifying key success factors.
- Citation du texte
- Sven Bach (Auteur), 2014, Success of Mergers and Acquisitions in the Insurance Industry: What Can We Learn From Previous Empirical Research?, Munich, GRIN Verlag, https://www.grin.com/document/279361
