Journal article
Efficiency and Demutualization: Evidence From the U.S. Life Insurance Industry in the 1980s and 1990s
The Journal of risk and insurance, Vol.74(3), pp.683-711
09/2007
Handle:
https://hdl.handle.net/2376/114035
Abstract
This article examines the efficiency changes of U.S. life insurers before and after demutualization in the 1980s and 1990s. We use two frontier approaches (the value‐added approach and the financial intermediary approach) to measure the efficiency changes. In addition, we use Malmquist indices to investigate the efficiency and productivity change of converted life insurers over time. The results using the value‐added approach indicate that demutualized life insurers improve their efficiency before demutualization. On the other hand, the evidence using the financial intermediary approach shows the efficiency of the demutualized life insurers relative to mutual control insurers deteriorates before demutualization and improves after conversion. The difference in the results between the two approaches is due to the fact that the financial intermediary approach considers financial conditions. The results of both approaches suggest that there is no efficiency improvement after demutualization relative to stock control insurers. There is, however, efficiency improvement relative to mutual control insurers when the financial intermediary approach is used.
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Details
- Title
- Efficiency and Demutualization: Evidence From the U.S. Life Insurance Industry in the 1980s and 1990s
- Creators
- Vivian JengGene C LaiMichael J McNamara
- Publication Details
- The Journal of risk and insurance, Vol.74(3), pp.683-711
- Academic Unit
- Finance and Management Science, Department of
- Publisher
- Blackwell Publishing Inc; Malden, USA
- Number of pages
- 29
- Identifiers
- 99900547406001842
- Language
- English
- Resource Type
- Journal article