A comparative study on the financial performance of Domestic Life Insurance Companies and Foreign Life Insurance Companies for the years 1988-1997

Date of Publication

1999

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Commerce Major in Management of Financial Institutions

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Abstract/Summary

The study is entitled A comparative study on the financial performance of domestic life insurance companies and foreign life insurance companies for the years 1988-1997 . This study aims to provide future policyholders a basis in determining which life insurance industry, domestic or foreign, to invest in. In the assessment of the financial performance limited to profitability, an individual is guided in the decision to be made.

This study covered a 10-year period from 1988-1997. It focused on analyzing the profitability of each company as the measurement of its financial performance and in determining profitability, financial ratios were used. The financial ratios used were based from the ratios used were: Return on Admitted Asset, Yield to Investment, Return on Equity, Net Gain to Total Income and Change in Premiums.

Some factors were considered in arriving at the sample size for each sector of the life insurance industry. One of which is that companies should be consecutively present for the whole period of the study. Another factor considered is that company's that underwent mergers during the time frame were not included. After having considered such factors, only sixteen (16) domestic life insurance companies from the total of twenty-four (24) were included. And as for the foreign life insurance sector, only two (2) companies were chosen from the total of twelve (12) foreign life insurance companies.

The data gathered were first subjected to a test of normality. This test is to determine if the data can be used in measuring the significant difference of both sector of the life insurance industry. It shows whether the data can be bounded by the probability distribution laws. Results showed that all five profitability ratio were normally distributed after arriving at this outcome, the date underwent the t-test of significance. The ANOVA or the analysis of variance further validated this test.

The following results were obtained after testing the significance of the ratios used. The return on admitted ratio was found to have no significant difference. This is primarily because on the restriction imposed on life insurance companies by the Insurance Commission in determining the admitted asset. The yield to investment ratio on the other hand resulted to have a statistically significant difference. Although both sector of the life insurance industry are subjected to the same restriction on their investment, the difference is attributed to the management of the investment portfolio of each sector. The return on equity ratio posted to have a significant difference this is due to the fact that foreign life insurance companies are required to put up additional capital.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU09267

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

39 numb. leaves

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