What Private Equity Does Differently: Evidence from Life Insurance

• 成果类型: Article
• 署名作者: Kirti, Divya; Sarin, Natasha
• 署名单位: International Monetary Fund; Yale University; Yale University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhad055
• 发表日期: 2023
• 页码: 201
• 关键词: cash flow; buyouts; performance; returns

摘要

This paper studies how private equity creates value and its consequences for consumer welfare in the insurance industry, where PE investments grew tenfold following the financial crisis. PE firms add value through regulatory and tax arbitrage that increases profits relative to their non-PE counterparts. Crucially, the impact on consumer welfare is nuanced: in the short run, consumers benefit from more favorably priced products. But the arbitrage strategy also exposes them to more risk, as annual expected losses scaled by capital buffers rise by 50 percentage points. This creates the possibility of consumer harm in the event of a downturn. Authors have furnished an , which is available on the Oxford University Press Web site next to the link to the final published paper online.