A study on the factors that affect the efficiency, growth, and stability of life insurance industry in the Philippines for the period 1994-1999

• Main Authors: Flores, Correyn O., Go, Gibb Ivan A., Madrid, Ryan Benedict S., Mercado, Nide Marie O.
• Format: text
• Language: English
• Published: Animo Repository 2001
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/17126
• Institution: De La Salle University

This paper, A Study on the Factors Affecting the Efficiency, Growth, and Stability, of the Life Insurance Industry in the Philippines , covered the period 1994-1999. This study attempts to identify the factors that affect the efficiency, growth, and stability, of the Life Insurance Industry in the Philippines. The factors identified in the study were as follows: (1) Investment Yield Ratio, (2) Return on Assets, (3) Admitted Assets, (4) Net Income, (5) Premium Income, (6) Change in Capital and Surplus Ratio and Lastly, (7) Policyholders' Surplus Ratio. The objectives were: (1) to identify and analyze the factors, which affect the industry's efficiency, growth, and stability, (2) to measure how such factors affect the efficiency, growth, and stability, (3) to determine the present condition of the life insurance industry in the Philippines. The tools used in attaining such objectives were those measures that have been previously mentioned. This paper had seven hypotheses. The null hypotheses were the following: 1) A change in the investment yield ratio of a life insurance company has no effect on the efficiency of the life insurance industry. 2) The return on assets of a life insurance company has no effect on the efficiency of the life insurance industry. 3) The admitted assets of a life insurance company have no effect on the growth of the life insurance industry. 4) The net income of a life insurance company has no effect on the growth of the life insurance industry. 5) The premium income of a life insurance company has no effect on the growth of the life insurance industry. 6) A change in capital and surplus ratio of a life insurance company has no effect on the stability of the life insurance industry. 7) The policyholders' surplus ratio of a life insurance company has no effect on the stability of the life insurance industry. The sample size used was the population. Only selected life insurance companies were intended to be studied and treated as the sample size of this study for the period 1994-1999. Life insurance companies that operated the complete six years of our study were the only ones allowed to be part of this study. The independent variables in the conceptual framework were the following: admitted assets, net income, premium income, policyholders' surplus ratio, change in capital and surplus ratio, return on assets and investment yield ratio. On the other hand, the dependent variables were the efficiency, growth, and stability. The research design used was a descriptive research. The 24 companies were evaluated using both the trend and cross-sectional analysis through the use of selected financial ratios and NAIC ratios. After doing the study, the proponents concluded that only the variables for efficiency and growth have had a significant relationship with the industry. This includes the following variables: return on assets for efficiency, admitted assets and premium income for growth. The remaining variables have no significant relationship with the industry. It was also concluded that the life insurance industry is efficient and growing. At the end of the study, the proponents made several recommendations that would contribute to improvement of the efficiency, growth and stability of the industry taken as a whole.