Regulation, Capital, and Organizational Form in U.S. Life Insurance
George H. Zanjani
Georgia State University - Risk Management & Insurance Department
June 27, 2003
American Economic Review, Vol. 97, No. 3, 2007
This paper studies the influence of the legal environment and economic conditions on the form taken by life insurance company incorporations between 1900 and 1949. It identifies three key factors associated with mutual formation - low initial capital requirements for mutuals, regulatory favoritism, and economic distress. Mutuals were formed almost exclusively in states offering an explicit advantage to mutual incorporation in the form of reduced initial capital requirements. This suggests that the mutual form's disadvantage in raising capital, in conjunction with rising capital requirements and the elimination of such regulatory favoritism, may have contributed to the decline in its use.
Keywords: Mutual Insurance, Law and Finance
JEL Classification: G22, G38, G28, K20, N21, N22working papers series
Date posted: July 23, 2003 ; Last revised: December 17, 2009
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