The impact of insurance mergers on shareholder returns

This study explores the impact of acquisitions on shareholders’ return within the insurance industry which took place between 1993 and 1996. The results reveal that acquiring firms do not post any significant abnormal returns during the announcement period, while the target firms get positive significant abnormal returns. When acquisitions are analyzed based on transaction price, cumulative average abnormal returns for large acquisitions are signifi-cantly higher than for medium-to-small acquisitions. In terms of payment methods, stock acquisitions are the ones with the greatest return. Finally, when acquisitions are grouped based on type, the returns on conglomerate mergers are superior to non-conglomerate mergers.