Mergers and acquisitions have consistently lifted the share price of insurers who pursued the practice, though it takes some patience for the phenomenon to happen.

Acquirers have outperformed their insurance subindustry index (a specific line of insurance) by 3.7 percent since 2008, and the margin has become more pronounced in the individual years since, according to new research from Willis Towers Watson, Cass Business School and Mergermarket. In 2015, for example, acquirers outperformed their index by 12.5 percent on average, the research report noted.

It’s not an instantaneous spike, however. The kick typically takes place in the six months after a merger announcement, the research report noted. For example, acquirers traded 1.1 percentage points higher than their index, on average, from six months before the M&A announcement to one day after, over the last three years. From that point, the average acquirer outperformed the sector index by 7.4 percent on average through six months after the deal announcement.

This trend continued in 2015, when researchers noted acquirers traded 2.8 percent higher than their index six months before an M&A announcement to one day after it came out. After that, the number spiked to 9.7 percent.

“While our figures show that these deals ultimately pay dividends, it takes time and effective post-deal actions to garner the best results,” Jack Gibson, global M&A lead for Willis Towers Watson M&A Risk Consulting, said in prepared remarks. “This lack of immediate reward coupled with the uncertainty on day one around a big deal are among the reasons why investors have been slow to acknowledge the benefits of M&A in the insurance sector.”

The report, “Insurance M&A Success Tracker,” is based on an analysis of all completed insurance sector deals conducted since 2008 and worth more than $50 million. Thomson Reuters provided the raw deal data.

Source: Willis Towers Watson