A comparative study on the determinants of the investment practices of the life insurance industry for the period 1993 to 1997

• Main Authors: Espinosa, Edward Gil L., Lopez, Peter Agustin T., Peralta, Ma. Cheryl B., Tabora, Micaela Ann S.
• Format: text
• Language: English
• Published: Animo Repository 2000
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/17460
• Institution: De La Salle University

This is the study A Comparative Study on the Determinants of the Investment Practices of the Life insurance Industry for the Period 1993 to 1997 . The proponents aimed to answer these questions: (1) What are the factors that determine the investment practices of the life insurance industry in the Philippines? and (2) Is there a difference in the investment practices of the top 5 life insurance companies and the remaining life insurance companies? To answer the following questions mentioned the proponents have set the following objectives: (1) To determine if there is a difference in the determinants of the investment practices of the top 5 life insurance companies and the remaining life insurance companies. (2) To determine the actual asset mix that gained the highest return when the economy is in boom and in bust. (3) To determine if there is difference in the efficiency of the top 5 and the remaining life insurance companies. The framework used in this study is according to the factors that affect the investment practices of the life insurance industry. Using a five (5) year period the proponents used the whole life insurance industry. After gathering the information: (1) asset characteristics: risk, return, liquidity and information cost. (2) economic factors: GNP, GDP, dollar-peso exchange rate, interest rate and inflation rate. And (3) returns on: bonds, Mortgage loans, Policy loans, real estate and stocks. The proponents compared these data by using the statistical tools: chi-squared (X2), T-test and Analysis of variances. Finally the proponents came to these conclusions: (1) Compared with the top 5 life insurance companies, the remaining life insurance companies have limited investible funds coming from capitalization and policy and other reserve funds which could enhance their underwriting capabilities and risk assumptions. (2) That the economic factors i.e., interest rate, inflation rate dollar-peso rate, GNP, and GDP do not affect return on investments of the life insurance companies. And lastly (3) There is no significant difference in the efficiency of investments between the top 5 with the remaining life insurance companies. With these conclusions the proponents put together these recommendations: (1) The remaining life insurance companies must aim to have more capitalization, market share, and et al. to be equally or more competitive that the top five life insurance companies. (2) The life insurance industry as a whole has a very good potential because their returns are not affected by economic factors and the remaining life insurance companies are as efficient as the top five in handling their investments. Therefore with a greater amount of capitalization, market share, etc, the industry could be of great help to the economy of the country. (3) The Insurance Commission must maintain if not improve the strict implementation of its rules and regulations.