Premium
Stock Market Reactions and Information Transfer Due to Financial Instability in the Life Insurance Industry
Author(s) -
Avila Stephen M.,
Eastman Kevin L.,
Corbett Richard B.,
Bratton John C.
Publication year - 2000
Publication title -
risk management and insurance review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 16
eISSN - 1540-6296
pISSN - 1098-1616
DOI - 10.1111/j.1540-6296.2000.tb00028.x
Subject(s) - corporation , life insurance , business , capital market , finance , stock market , insurance industry , economics , monetary economics , financial system , actuarial science , paleontology , horse , biology
This study examines the stock market reactions and information transfer effects due to financial instability for four life insurance companies that eventually failed or were taken over by regulators. The four companies were First Executive Corporation, First Capital Holdings Corporation, Monarch Capital Corporation, and Mutual Benefit Life Insurance Company. In general, significant negative capital market responses were found after a company released an announcement regarding financial instability. Information transfer effects of a negative announcement by one insurer were not found to have a significant impact on the other insurers. This study complements past studies of contagion effects within the insurance industry.