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Insurers’ M&A in the United States during the 1990-2022 period: Is the Fed monetary policy a causal factor

Author

Listed:
  • Dionne, Georges

    (HEC Montreal, Canada Research Chair in Risk Management)

  • Fenou, Akouété

    (HEC Montreal, Canada Research Chair in Risk Management)

  • Mnasri, Mohamed

    (HEC Montreal, Canada Research Chair in Risk Management)

Abstract

We investigate the causes of the gap in mergers and acquisitions (M&A) between life and nonlife insurers in the US from 1990 to 2022. Our DID analysis indicates a parallel trend between M&As in the life insurance and nonlife insurance sectors from 1990 to 2012, and a significant difference after 2012. There was a shock in the life insurance market that resulted in a reduction in M&As after 2012. Variable annuity sales in the life insurance sector declined after 2012. We find evidence that low interest rates observed during the implementation of the quantitative easing policy of the Fed from 2008 to 2012 caused the difference in M&As in the life sector after 2012.

Suggested Citation

  • Dionne, Georges & Fenou, Akouété & Mnasri, Mohamed, 2024. "Insurers’ M&A in the United States during the 1990-2022 period: Is the Fed monetary policy a causal factor," Working Papers 24-2, HEC Montreal, Canada Research Chair in Risk Management.
    • Handle: RePEc:ris:crcrmw:2024_002
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    More about this item

    Keywords

    Merger and acquisition; life insurance; nonlife insurance; US insurance market; DID methodology; quantitative easing policy; life insurance annuity; variable annuity;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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