Intra-industry signals resulting from insurance company mergers

Given the increasing consolidation in the insurance industry, the authors' objective is to determine how the market revalues the acquirer, target, and, rival insurance companies in response to merger announcements. The authors find that target and acquirer insurance companies experience favorable valuation effects at merger announcements. The authors also find positive and significant intra-industry effects in response to the announcements of insurance company mergers, which supports the signaling hypothesis. Furthermore, the authors find that the magnitude of the intra-industry effects is conditioned on the type, size, and location of the insurance companies.