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Insurer Share Price Gets Bump After Acquisition, but M&A Is a Long-Term Game

When a global, publicly traded insurer makes an acquisition, its share price generally outperforms the insurance-industry average in the short term. But more important to long-term success is what happens in the years after the deal is made.

By Phil Gusman | Updated on March 04, 2014

When a global, publicly traded insurer makes an acquisition, its share price generally outperforms the insurance-industry average in the short term, but two years down the road, the acquisition provides no average valuation premium compared to insurance stocks overall, a new analysis says.

Towers Watson, using data extracted from its ongoing Quarterly Deal Performance Monitor, says, for deals that occurred between 2008 and 2013, acquiring companies’ share prices performed 4.2 percentage points better than the industry average in the short term. The short-term gains were shared equally among life, property and casualty and composite businesses, Towers Watson says.

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