Doctoral Thesis / Dissertation from the year 2014 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, University of Cologne (Seminar für Allg. BWL, Risikomanagement und Versicherungslehre), language: English, abstract: Since the 20th century, the insurance industry has experienced an unprecedented wave of M&A. However, in spite of the drastic increase in insurance M&A activity, there has been little consistent empirical evidence on the value enhancement of these deals. Hence, many open questions still exist in this research area. The most fundamental questions are whether insurance M&A actually create value and what determinants influence the success of these undertakings. This thesis attempts to find answers to these questions by first examining the status quo of academic literature published in this field of research and bringing together the empirical findings on the success of insurance M&A and its influencing factors. Overall, the literature review outlines that insurance M&A on average tend to create value for shareholders of the target firms as well as for the combined entity of acquirer and target. Moreover, shareholders of acquiring US insurance firms, on average, also benefit from these corporate undertakings. However, negative short-term as well as long-term wealth effects for acquiring insurers shareholders are the common finding in capital market studies analyzing the effects of M&A transactions in the European insurance industry. Secondly, the reliability and validity of the findings of previous research are tested in an own empirical analysis which uses a fairly new approach to evaluating the success of M&A by using the idea of stochastic dominance (SD). More precisely, using a sample of 102 transactions conducted by publicly traded Western European insurance firms between the years 1993 and 2009, this work analyzes whether investors in acquiring insurance firms benefit from M&A by comparing return distributions of acquiring firm portfolios with benchmark portfolios using the first two orders of SD. The results show that insurance M&A trigger a negative short-term capital market reaction for acquiring European insurance firms. However, this short-term underperformance diminishes over time, and over a longer period of time of up to three years after M&A announcement, there is no underperformance of acquiring European insurers. In conclusion, based on the accumulated evidence from past empirical studies as well as the empirical investigation of this thesis, it can be concluded that M&A, not only in the US insurance market but also in the European insurance market, seem to be a viable model and are likely to lead to success for all parties involved.

Acknowledgements List of Abbreviations List of FiguresList of Tables1 Introduction1.1 History of the Consolidation Process and Relevance of the Topic1.2 Problem Statement and Research Gaps1.3 Research Objectives and Development of Research Questions1.4 Organization of the Study2 Theoretical and Methodological Background2.1 Overview2.2 Theoretical Foundations2.3 Methodological Foundations3 Literature Review: Prior Research on the Success of Insurance M&A and its Determinants3.1 Overview3.2 Overview of Recent Studies3.3 Selection of Prior Research3.4 Literature Review Method3.5 Development of Research Clusters3.6 Review of Individual Studies on the Overall Success of Insurance M&A by Cluster3.7 Review and Results of Prior Capital Market Research on the Overall Success of Insurance M&A3.8 Review and Results of Prior Capital Market Research on the Determinants of M&A Success in the Insurance Industry4 Evidence from the European Insurance Sector: Empirical Analysis of the Success of M&A and its Determinants4.1 Overview4.2 Formulation of Hypotheses4.3 Specification of the Empirical Study4.4 Results of the Empirical Study5 Conclusion5.1 Summary5.2 Limitations5.3 ImplicationsAppendixFiguresTablesReferences