Comparative Analysis of Pre and Post Merger Era of Shareholders' Wealth in Nigeria, Evidence from Aiico Insurance Plc

Abstract

This study compared shareholders wealth in pre and post mergers era using a selected insurance company in Nigeria as a case study. In order to achieve the objectives of the study, historical data was generated from 2001 to 2012 periods from the financial statement of AIICO Insurance Plc. The data was analyzed using descriptive statistics specifically line graph was used to determine trend in insurance company's profit and t- test was used to determine the significant difference in shareholders wealth in pre and post mergers and acquisitions era This study found that there was an increase in the profit of insurance company and an insignificantly decreased in ROCE, DPS, EPS, NPM after the mergers and acquisitions exercise. Therefore the study concluded that mergers and acquisitions lead to increase in profit of insurance companies and decrease in returns to shareholders. This study recommended among others that even though mergers and acquisitions boost profit, evidence shows that the wealth of shareholders declined insignificantly after the mergers and acquisitions exercise. Therefore, shareholders should not only look at the returns on their funds, but also bother about the safety and protection of their funds. Finally, regulatory bodies like Securities and Exchange Commission (SEC) and National Insurance Commission (NICOM) should ensure that the insurance companies do not make their shareholders worse- off than they were before the mergers and acquisitions exercise through effective monitoring.