TITLE
"The Market Impact of the Financial Services Modernization Act of 1999: Differences Between Life Insurers and Property-Liability Insurers," Journal of Insurance Issues, David Marlett, Carl Pacini, and William Hillison, Fall 2003, Vol. 26, No. 2, pp. 69-92. Entire article in Acrobat format.

ABSTRACT
Recent research has examined the effect of the passage of the Financial Services Modernization Act of 1999, more commonly known as the Gramm-Leach-Bliley Act, on the market value of insurers, commercial banks, securities firms, thrifts, and finance companies.  This study differs from previous research in that it examines life insurers and property-liability insurers as separate industries rather than treating them as a single industry.  This study also analyzes tracing volume in addition to share price reactions.  Finally, this study features two variables in a cross-sectional analysis of insurer stock returns not considered in prior research. 

Using a generalized least squares portfolio approach and Corrado's rank statistic, we find significant share price reactions to certain legislative announcements surrounding the passage of the GLB.  Trading volume reactions corroborate the significant share price reactions.  Our results indicate that life insurers and P-L insurers reacted differently to enactment of the GLB.  Smaller life insurers with high liquidity and high leverage had the most positive (or least negative) share price reactions of all insurers. 

[Keywords: Gramm-Leach-Bliley Act; market value; insurance; share price reaction]