Document Type
Occasional Paper
Publication Date
Fall 11-2006
Abstract
The regulatory and competitive environment in the life insurance industry has changed dramatically in recent years. We investigate the effectiveness of demutualization as a strategic response to the challenges posed by these sweeping changes. The study finds that the demutualized firms generally have implemented a successful strategy based on higher growth, greater profitability, cost effectiveness and shifts in product mix. Also, we find that management takes greater risk in the investment portfolio. In addition, demutualization unlocks value lying dormant in the mutuals’ surplus. The paper concludes that the demutualized firms have generated substantial excess returns over the several market indexes, creating significant economic value.
Recommended Citation
Chugh, Lal and Meador, Joseph W., "Demutualization in the Life Insurance Industry: A Study of Effectiveness" (2006). Financial Services Forum Publications. 8.
https://scholarworks.umb.edu/financialforum_pubs/8
Comments
College of Management at University of Massachusetts Boston, Financial Services Forum, Working Paper 1014.
Published in Review of Business, Winter 2006, Vol. 27, Number 1, pp. 10-17.