The Impact of the European Union Insurance Directives on Insurance Company Stocks

Date
2003-03-01
Authors
Campbell, Cynthia
Goldberg, Lawrence
Campbell, Cynthia
Rai, Anoop
Major Professor
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Altmetrics
Authors
Research Projects
Organizational Units
Finance
Organizational Unit
Journal Issue
Series
Department
Finance
Abstract

This article examines the impact of the passage of the Second and Third Life and Non-Life European Insurance Directives on insurance firms located in 14 European Union countries, Norway, and Switzerland. The third directives have a wealth effect on the European insurance market, while the second directives do not. The Third Life Directive resulted in a wealth increase for the European insurance market, while the Third Non-Life Directive had a modest negative wealth effect. The wealth effects differ at both the country and firm level. The directives have differential impacts on firms depending on the firms’ characteristics and those of the market they operated in prior to the directives. Regression results indicate that the second directives have impacted firms in protected markets negatively, especially those with higher debt and higher returns on assets. At the time of the third directives, insurance firms benefited, even those in previously protected markets, indicating that firms may have positioned themselves in preparation for the liberalization of the laws.

Comments

This is a preprint of an article published in The Journal of Risk and Insurance 70, no. 1 (2003): 125–167, doi:10.1111/1539-6975.00052.

Description
Keywords
Citation
DOI
Collections