Regulation, Capital, and Organizational Form in U.S. Life Insurance

Posted: 23 Jul 2003 Last revised: 17 Dec 2009

See all articles by George H. Zanjani

George H. Zanjani

University of Alabama - Department of Economics, Finance and Legal Studies

Date Written: June 27, 2003

Abstract

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, N22

Suggested Citation

Zanjani, George H., Regulation, Capital, and Organizational Form in U.S. Life Insurance (June 27, 2003). American Economic Review, Vol. 97, No. 3, 2007, Available at SSRN: https://ssrn.com/abstract=420580 or http://dx.doi.org/10.2139/ssrn.420580

George H. Zanjani (Contact Author)

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

361 Stadium Dr, Ste 200
Tuscaloosa, AL 35487
United States

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