Consolidation of the US property and casualty insurance industry: Is climate risk a causal factor for mergers and acquisitions?

Georges Dionne (), Akouété Fenou () and Mohamed Mnasri ()
Additional contact information
Akouété Fenou: HEC Montreal, Canada Research Chair in Risk Management
Mohamed Mnasri: HEC Montreal, Canada Research Chair in Risk Management

No 23-1, Working Papers from HEC Montreal, Canada Research Chair in Risk Management

Abstract: This report analyzes the difference between mergers and acquisitions (M&As) of target insurers in the US life and non-life insurance sectors. We first document M&A transactions in the US insurance market between 1990 and 2021 and select the M&A transactions related to US target insurers. We then study the evolution of the life and non-life insurance sectors over time in order to determine whether there are parallel trends between the evolution of M&As of target insurers in these two sectors over time. We empirically test the difference between the M&As of the life and non-life insurance sectors by employing a natural experiment method and verify whether climate risk has been a causal factor in the observed difference in mergers and acquisitions between the two sectors after 2012. Our results do not support a causal link between climate risk and M&As during the period of analysis. Insurers choose other diversification sources of capital, including reinsurance, premium management, CAT bonds, and better capital management under stronger risk regulation.

Keywords: Mergers and acquisition; US insurance industry; property and casualty insurance; life insurance; health insurance; climate risk; capital management; reinsurance; ILS; CAT bonds; premium management; risk regulation (search for similar items in EconPapers)
JEL-codes: C10 C22 C23 C58 G22 G28 G52 H12 (search for similar items in EconPapers)
Pages: 106 pages
Date: 2023-02-15
New Economics Papers: this item is included in nep-com and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.risksresearch.com/_files/ugd/a6eed3_0d ... 822373c80abe45b6.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:crcrmw:2023_001

Access Statistics for this paper

More papers in Working Papers from HEC Montreal, Canada Research Chair in Risk Management Contact information at EDIRC.
Bibliographic data for series maintained by Claire Boisvert ().