Effect of Mergers and Acquisitions of Non-Life Insurers in Japan : Evidence on Extensive M&As

The non-life insurance industr y in Japan under went extensive mergers and acquisitions (M&As) twice in the early part of 2000s and 2010s.During the first wave of the M&As which took place from 2001 to 2004, 15 firms were consolidated into 6 firms.In the second wave of the M&As from 2006 to 2010, those 6 firms and one another firm were integrated under the 3 holding companies.Now the 3 holding companies enjoy 86.15 % of the non-life insurance market including reinsurance special companies.Those M&As are rather unique in that they were implemented only among the traditional firms and that there appeared to have been no strong purposes other than gaining competitive edge by expanding the market share.Because the industry had already been highly developed and matured, however, there are questions as to what is effect of them and whether they could fulfill such purposes to better compete under the very stable market and industry environment.The hypothetical answers are that they are mostly mere addition of the original existing firms without causing any fundamental qualitative changes of the market and industry and that the following firms have not been able to catch up or pass over the leading firms.This paper will substantiate the hypotheses by examining the management indexes from 1997 through 2013.