THE FINANCIAL FACTORS THAT DISTINGUISH OF THE HIGH-PERFORMING AND LOW-PERFORMING OF JOINT VENTURE (JV) LIFE INSURANCE COMPANIES

• Main Author: Rhegina Putri, Andrea
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/83155
• Institution: Institut Teknologi Bandung

This study evaluates the performance of joint venture life insurance companies in Indonesia using discriminant analysis, focusing on key financial variables to differentiate well-performing from poorly-performing companies. Joint venture life insurance companies, formed through collaborations between local and foreign firms, hold a dominant 69.1% market share in the Indonesian life insurance sector. The crisis faced by PT Asuransi Jiwa Bakrie Life in 2008, due to aggressive stock market investments resulting in significant policyholder losses and a decline in consumer confidence, highlights the importance of effective performance analysis. Discriminant analysis, employing variables such as Net Profit Margin (NPM), Leverage Ratio, Liquidity Ratio, and Risk-Based Capital (RBC), proved to be an effective tool, achieving an accuracy rate of 81.7% in distinguishing highperforming companies from low-performing ones. The research utilizes descriptive and quantitative methods, with a case study approach focusing on Indonesian joint venture life insurance companies from 2020 to 2022. Data was collected through financial statements available on official company websites, using purposive sampling techniques. The findings indicate that discriminant analysis is a reliable method for classifying joint venture life insurance companies based on performance, supporting the hypothesis that significant differences exist between well-performing and underperforming companies. This analysis not only identifies the crucial financial variables impacting performance but also provides valuable insights for investors and management. Investors can make more informed decisions, while management can enhance company performance by focusing on these key financial metrics. In conclusion, the study confirms that Net Profit Margin, Leverage Ratio, Liquidity Ratio, and Risk-Based Capital are significant predictors of company performance, reinforcing the effectiveness of discriminant analysis in the life insurance sector. This comprehensive evaluation underscores the importance of financial health and prudent management practices in maintaining and improving company performance in the competitive insurance market.