A Discriminant Analysis Approach to Predict the Performance of Joint Venture General Insurance Companies in Indonesia

• Main Author: Moses P S (NIM 19014070), Gerard
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/22255
• Institution: Institut Teknologi Bandung

ABSTRACT <br /> <br /> Insurance industry plays a very important role to the national economy of <br /> <br /> Indonesia. Nonetheless, the competition in general insurance sector disposed to <br /> <br /> become fiercer for the past few years, especially in the joint venture companies <br /> <br /> side. To survive and win in a very competitive industry, a company must perform <br /> <br /> well and much better than the competitors. The objective of this paper is to <br /> <br /> formulate a measurement tool which can measure and predict the performance of <br /> <br /> a joint venture general insurance company in Indonesia as well as to distinguish <br /> <br /> between a group of companies which perform well and which do not perform <br /> <br /> well. The samples used in this analysis are taken from all of the 16 joint venture <br /> <br /> general insurance companies in Indonesia (total sampling) and the data used is <br /> <br /> based on the period of 2011-2015. The method used in this analysis is the <br /> <br /> Discriminant Analysis method which uses statistical techniques and combined <br /> <br /> financial ratios model that can be used as one of the appropriate approach to <br /> <br /> predict the performance of insurance company. The result of the analysis suggests <br /> <br /> that the management of the joint venture general insurance company in Indonesia <br /> <br /> must thoroughly understand the six selected financial ratios, those are Debt Ratio, <br /> <br /> Return on Assets, Net Profit Margin, Level of Claim Settlement, Combined Ratio <br /> <br /> and Average Collection Period. The analysis result can be used as a guidance to <br /> <br /> improve the company’s performance in order to be able to survive and win in the <br /> <br /> highly competitive industry in joint venture general insurance sector in Indonesia. <br /> <br /> key words: financial performance, financial ratio, joint venture general insurance <br /> <br /> company, discriminant analysis