An Examination of Life Insurer Share Price Behavior Surrounding Covid-19 Death Announcements

As of May 2022, the Covid-19 pandemic records over 1 million deaths in the United States. Pertinent to the reported number of deaths, it is questioned whether life insurance firms gained or lost from those incidences. This paper pursues an event study that examines life insurer share price behaviors by the announcements reporting the cumulative death numbers when they reach a certain threshold. We find that life insurers’share prices drop with every announcement. Specifically, our analysis finds evidence for the support of the damage hypothesis based on two competing hypotheses in the insurance literature: damage and revenue hypothesis. Our post-analysis also finds that the pandemic penalized overvalued firms and discouraged dividend cash spending.