Performance analysis of Takaful and conventional insurance companies in Saudi Arabia

2018 ◽  
Vol 25 (2) ◽  
pp. 677-695 ◽  
Author(s):  
Muhammad Hanif Akhtar
Keyword(s):  
Saudi Arabia ◽  
Economies Of Scale ◽  
Productivity Index ◽  
Insurance Companies ◽  
Programming Technique ◽  
Content Type ◽  
Insurance Sector ◽  
Starting Point ◽  
Insurance Firms ◽  
Efficiency And Productivity

Purpose The purpose of this paper is to analyze the performance of Takaful and conventional insurance companies in Saudi Arabia during a period of 2010-2015 by using the data envelopment analysis (DEA) technique for the whole population of insurance companies. Design/methodology/approach Given its objectives, the present study adopts the most prevalent DEA approach, by using the DEA Solver-Pro (Version 13). The DEA has emerged as a valuable analytical research technique. It measures the relative efficiency of firms in the presence of multiple inputs and outputs, based on a linear programming technique, and attempts to find out the firms that determine an envelopment frontier, are super efficient and with a higher productivity index. Findings It stems from the analysis that on a yearly basis, the average efficiency scores of firms have soared up overtime since 2010 till 2014 reflecting that most of the companies did well on the efficiency front. It is notable to mention here that the top slots for super efficiency are taken over by smaller firms, while the bigger firms are laggards here rather than the leaders. This reflects that the larger insurance firms need to augment their efficiency levels through more efficient utilization of inputs. The results of the study reveal that both Takaful and the larger conventional insurance firms in the country need to strengthen their operations more efficiently in order to take advantage of the economies of scale and scope. Market share and profitability are important determinants of efficiency. Research limitations/implications The larger insurance firms in the country need to a possible solution to the issue of inefficient market dynamics might lie in consolidation of the market through mergers and acquisitions. However, this needs a direct involvement of regulators in the Kingdom so that the market becomes healthy. Even though the Saudi insurance sector appears to have benefited from the compulsory insurance regulations for the expatriates and their families, however, there is still a need for efficiency and productivity improvement in the industry. The Takaful firms need to adopt such measures that would help them to take advantage of their specialized products toward efficiency vis-à-vis productivity drives. Finally, the insurance firms in Saudi Arabia need to adopt the use of threshold practices in order to compare their relative performance to improve on their efficiency and productivity levels by catching-up with the frontiers of best practices. Originality/value Based on the available literature, an exclusive study on the insurance sector of Saudi Arabia is so far non-existent. The study stands as pioneer to provide a starting point on overall performance evaluation of insurance firms in Saudi Arabia in various contexts in addition to the current and future trends of the insurance sector in the Kingdom.

Intelligence and its impact on managerial effectiveness and career success (evidence from insurance sector of Pakistan)

2016 ◽  
Vol 35 (4) ◽  
pp. 505-516 ◽  
Author(s):  
Usman Aslam ◽  
Muhammad Ilyas ◽  
Muhammad Kashif Imran ◽  
Ubaid Rahman
Keyword(s):  
Career Success ◽  
Cultural Intelligence ◽  
Sampling Technique ◽  
Simple Random Sampling ◽  
Insurance Companies ◽  
Managerial Effectiveness ◽  
Job Outcomes ◽  
Content Type ◽  
Cognitive Intelligence ◽  
Insurance Sector

Purpose – The purpose of this paper is to investigate the theoretical linear model on intelligence, i.e. emotional, social, cognitive, and cultural intelligence and its impact on managerial effectiveness and career success in the perspective of insurance sector of Pakistan. Design/methodology/approach – Data collected from 202 managers of insurance companies by using structured questionnaires’ and simple random sampling technique. Multiple regression analysis has used to check the simultaneous effect of multiple types of intelligence on managerial job outcomes. Findings – The results of research revealed that emotional, social, and cognitive intelligence have positive effect on managerial effectiveness and career success. Emotional intelligence is one of the strongest predictor that has significant impact of managerial effectiveness compared to other types of intelligence. Conversely, cultural intelligence has insignificant relation with managerial effectiveness and career success. There are very rare studies conducted to explore the role of multiple types of intelligence to improve managerial job outcomes in the context of insurance sector. This study proved that the transformation of business from production era to relationship-based era increases the importance of multiple types of intelligence to become an effective manager. Research limitations/implications – Moreover, this study contributes in theoretical literature and explores new dimensions for future researchers, practitioners’, and management consultants to recognize the effectiveness of intelligence especially in services sector organizations. Data collected from one sector and by using one point of time raised the issue of common method variance and causality. Originality/value – This study has examined the overarching model on intelligence. Researchers did not find a single study that has addressed the multiple types of intelligence and its impact on managerial outcomes in the perspective of insurance sector.

Myanmar's insurance sector poised for liberalisation

2016 ◽  
Keyword(s):  
Regulatory Framework ◽  
Insurance Companies ◽  
Government Bond ◽  
Content Type ◽  
Customer Base ◽  
Insurance Sector

Subject Myanmar insurance sector prospects. Significance Myanmar's insurance sector is underdeveloped, constrained by an onerous regulatory framework and absence of foreign industry actors, but 2017 is expected to see reforms that should catalyse the sector. Impacts Foreign insurance companies may be given permission to take the first steps in conducting business in Myanmar. However, this would likely be limited to a closely defined customer base. A more robust and dynamic insurance sector could aid government revenues by aiding government bond sales, bringing in kyats. Myanmar insurers will face competition within ASEAN as the insurance sector develops.

Investment Portfolio Performances of Public Sector General Insurance Firms in India: An Empirical Approach

2017 ◽  
Vol 6 (1) ◽  
pp. 61-75
Author(s):  
Joy Chakraborty ◽  
Sankarshan Basu
Keyword(s):  
Public Sector ◽  
Multiple Linear Regression Model ◽  
Insurance Companies ◽  
The Public ◽  
Insurance Sector ◽  
General Insurance ◽  
Long Run ◽  
Insurance Firms ◽  
Investment Portfolios ◽  
The Impact

Deregulation of the Indian insurance sector has witnessed the rise of private players in the Indian general insurance sector post-1999. Though the four major public sector general insurers still continue to dominate the Indian general insurance market, an abrupt rise in the number of private players has raised concerns upon the solvency position of the public sector general insurance companies in safeguarding their policyholders’ interests. The major reason for this concern could be attributed to the existing investment portfolios of the general insurance firms, the impact of which has been felt upon their solvency position. The present study investigated the investment portfolios of the four major public sector general insurance firms in India involved in multiline businesses, and its subsequent impact upon their solvency position. The application of the multiple linear regression model has been employed to investigate the solvency determinants of the public sector general insurance firms in view of their short-term and long-term investment portfolios, covering the study period from 2005–2006 to 2014–2015. The findings of the study have pointed out the necessity for the four public sector general insurers to focus on certain key investment variables in their investment portfolios in ensuring a sound solvency position in the long run.

Concentration and financial stability in the property-liability insurance sector: global evidence

2017 ◽  
Vol 18 (3) ◽  
pp. 284-302 ◽  
Author(s):  
Muhammed Altuntas ◽  
Jannes Rauch
Keyword(s):  
Financial Stability ◽  
Empirical Support ◽  
Policy Implications ◽  
Large Set ◽  
Data Set ◽  
Content Type ◽  
Global Database ◽  
Insurance Sector ◽  
Insurance Firms ◽  
The Stability

Purpose This paper aims to examine the effect of concentration in the insurance sector on insurer stability for a large set of developed and developing countries. In particular, the authors test whether concentration reduces financial fragility in the insurance sector (“concentration-stability view”) or decreases stability in the insurance sector (“concentration-fragility view”). Design/methodology/approach The authors use a data set of 14,402 firm-year observations of property-liability insurers who appear in A.M. Best’s Statement File Global database during the period 2004-2012. They use regression analyses to examine the effect of concentration on the stability of insurance firms and apply different measures of concentration. Findings The results provide empirical support for the “concentration- fragility view”; that is, higher levels of concentration are associated with decreases in the insurance sector’s financial stability. Research limitations/implications The results have important policy implications, given that a primary purpose of insurance regulation is to protect policyholders against insurance firm defaults. Originality/value No previous research analyzes how recent trends in competition and consolidation, which have led to changes in insurance market concentration, affect the stability of insurance firms around the world. This research is the first paper that provides evidence on the relation between concentration and stability in the insurance sector.

scholarly journals Determinants of Financial Performance of Insurance Companies: Empirical Evidence Using Kenyan Data

2021 ◽  
Vol 14 (12) ◽  
pp. 566
Author(s):  
Kamanda Morara ◽  
Athenia Bongani Sibindi
Keyword(s):  
Financial Performance ◽  
Fixed Effects ◽  
Insurance Industry ◽  
Insurance Companies ◽  
Random Effects Models ◽  
Insurance Sector ◽  
Life Insurers ◽  
Insurance Firms ◽  
Financial Performance Measures ◽  
The Government

The drivers of financial success of the insurance industry are of interest to several players in any economy including the government; policymakers; policyholders; and investors. In Kenya; there have been relatively few studies on this topic; most of which look at narrow elements that determine insurance companies’ performance. This article sought to explore the components contributing to the financial performance of insurance firms. We employed a sample consisting of 37 general insurers and 16 life insurers for the period running from 2009 to 2018 and utilised panel data methods in order to establish the determinants of financial performance of Kenyan insurers. The pooled OLS; fixed effects and random effects models were estimated with the financial performance measures (proxied by either ROA or ROE) as the dependent variables. The results of the study documented that insurer financial performance and size were positively related. The study also found that insurer financial performance was negatively related to the age variable. The study also unraveled that higher leveraged insurance companies performed better than their lowly geared peers. This article provides broad analyses of the various drivers of financial performance of the insurance industry in Kenya. The findings of this study contribute to the academic literature on the financial performance of the insurance sector in Kenya and Africa as a whole. Furthermore; it gives pointers to the management of insurance companies on the aspects of their business that would need greater attention to drive and sustain superior financial performance.

scholarly journals ASSESSING PROFITABILITY AND GROWTH OF INSURANCE SECTOR IN SAUDI ARABIA: USING FINANCIALS AND TANGIBLES

2019 ◽  
Vol 7 (6) ◽  
pp. 617-624 ◽  
Author(s):  
Anis Ali ◽  
Mohammad Rumzi Tausif
Keyword(s):  
Saudi Arabia ◽  
Growth And Development ◽  
Insurance Industry ◽  
Insurance Companies ◽  
Index Numbers ◽  
Insurance Sector ◽  
External Analysis ◽  
Excess Liquidity ◽  
Fixed Base ◽  
Internal And External Factors

The purpose: The purpose of this study to find out the contribution of internal (financial) and external (tangible & human resource) factors of growth and development of the Saudi insurance sector and facilitate suggestions. Methodology: The study considers financial data of insurance companies of Saudi Arabia for the period 2013 to 2017for internal analysis while data from 2010 to 2015 for external analysis. Trend indices (chain based index numbers & fixed base index numbers) from financial statements and insurance establishments and human resources of the insurance industry are prepared to know the internal and external factors responsible for growth and development. The averages of trend indices are obtained to get the results of the analysis. Findings: The study finds that there is negativity in operational efficiency. It also finds that the internal liabilities or shareholders’ equities are decreasing continuously. Also, establishments engaged in insurance activities are not enough to cover all prospective customers. Implications: The finding implies that the increase in revenues is not enough. The findings also imply a weak long term paying ability towards this the study recommends further investment in profitable options like securities and avoid excess liquidity and increase insurance penetration. Novelty: This study is one of the few that assesses the performance of the insurance sector of Saudi Arabia. In the process, it performs internal analysis using operational and financial factors; and an external analysis using tangibles and intangibles.

Total factor productivity of the non-life insurers in India: Malmquist index with a new decomposition

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ashiq Mohd Ilyas ◽  
S. Rajasekaran
Keyword(s):  
Total Factor Productivity ◽  
Life Insurance ◽  
Economies Of Scale ◽  
Negative Impact ◽  
Malmquist Index ◽  
Scale Efficiency ◽  
Factor Productivity ◽  
Decomposition Approach ◽  
Content Type ◽  
Insurance Sector

PurposeThis paper aims to measure the change and the sources of change in total factor productivity (TFP) of the Indian non-life insurance sector over the period 2005–2016.Design/methodology/approachThis study employs the bootstrapped Malmquist index (MI) to assess the changes in the TFP and adopts a decomposition approach proposed by Balk and Zofío (2018). Moreover, it utilises truncated regression to identify the determinants of the TFP. In addition, it employs Wilcoxon-W test and t-test to scrutinise the difference between the state-owned and the private insurers in terms of variations in TFP and its various components.FindingsThe results divulge a miniature improvement in TFP of the insurance sector, which is primarily attributable to the improvement in scale efficiency (economies of scale). The results also reveal that there are no significant TFP differences across the ownership. However, private insurers have better scale efficiency and lower input-mix efficiency than state-owned insurers. In addition, the results unveil that size, diversification and reinsurance have a negative impact on the TFP, while age has a positive impact on it.Practical implicationsThe results may help the policymakers to frame new consolidation policies. Moreover, the findings may guide the decision-makers of the Indian non-life insurance companies to abate inefficiency and improve TFP.Originality/valueThis study estimates bias-corrected changes in TFP and efficiency in the non-life insurance sector. Moreover, it adopts an elaborated decomposition of the MI to identify the true sources of change in the TFP.

Effects of cross-border acquisitions on efficiency and productivity of acquired companies: evidence from cement industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Slađana Savović ◽  
Predrag Mimović
Keyword(s):  
Data Envelopment Analysis ◽  
Transitional Economies ◽  
Cement Industry ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Data Envelopment ◽  
Content Type ◽  
Cross Border ◽  
Efficiency And Productivity ◽  
Practical Implications

PurposeThe purpose of this paper is to explore the effects of cross-border acquisitions on the efficiency and productivity of acquired companies in the cement industry in the context of a transitional economy.Design/methodology/approachThe Data Envelopment Analysis (DEA) and Malmquist Productivity Index were used to assess the efficiency and productivity of the acquired companies over the period 2000–2018. DEA and Malmquist index are combined with bootstrapping to perform succinct statistical inferences for determining the accuracy of results. The study assesses partial efficiency and productivity of three inputs: material, capital and labour, as well as the total factor efficiency and productivity of the acquired companies in the short and long term after the acquisitions.FindingsThe research results suggest that efficiency of material, efficiency of labour and the total factor efficiency of the acquired companies are higher after the acquisitions than before, while efficiency of capital is lower. In addition, the results show that the acquisitions had a positive impact on total factor productivity of the acquired companies.Practical implicationsThe results of this study have practical implications for managers, especially for policy-makers and industry analysts in deciding whether to encourage or discourage cross-border acquisitions in transitional economies.Originality/valueThe study contributes to a better understanding of the impact of cross-border acquisitions on efficiency and productivity of acquired companies in the manufacturing industry. Research in transitional economies related to subject matter is limited, and this study is the first empirical investigation of the effect of cross-border acquisitions on the efficiency and productivity in the cement industry in Serbia by applying the Data Envelopment Analysis.

Global Malmquist Productivity Index based on preference common-weights

Filomat ◽  
2016 ◽  
Vol 30 (10) ◽  
pp. 2653-2661 ◽  
Author(s):  
Salman Abbasian-Naghneh
Keyword(s):  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Productivity Change ◽  
Data Envelopment ◽  
Programming Technique ◽  
Common Weights ◽  
Common Basis ◽  
Dea Models ◽  
Efficiency And Productivity ◽  
Linear Programming Technique

Data Envelopment Analysis is a linear programming technique for assessing the efficiency and productivity of decision making units (DMUs). Over the last decade, DEA has gained considerable attention as a managerial tool for measuring performance. The flexibility in selecting the weights in standard DEA models deters the comparison among DMUs on a common base. Moreover, these weights are unsuitable to measure the preferences of a decision maker (DM). For dealing with these two difficulties simultaneously; we use preference common weights. This paper uses preference common weights for time-series evaluations to calculate the global Malmquist productivity index (MPI) so that the productivity of changes of all DMUs have a common basis for comparison, and DM?s preference information is incorporated in calculating global MPI. The Malmquist Productivity Index (MPI) suggests a convenient way of measuring the productivity change of a given unit between two consequent time periods.

Measurement and determinants of total factor productivity: evidence from Indian banking industry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Biswabhusan Bhuyan ◽  
Subhamitra Patra ◽  
Ranjan Kumar Bhuian
Keyword(s):  
Total Factor Productivity ◽  
Economies Of Scale ◽  
Banking Sector ◽  
Value Added ◽  
Productivity Index ◽  
Annual Data ◽  
Fiscal Deficit ◽  
Factor Productivity ◽  
Content Type ◽  
Frontier Analysis

PurposeThe purpose of this study is to measure the level of total factor productivity of the Indian banking sector and to identify both the bank-specific and macroeconomic determinants of the total factor productivity after the global subprime mortgage crisis.Design/methodology/approachThe research sample consists of 61 commercial banks including 21 public sector banks, 18 private sector banks and 22 foreign banks. The annual data is collected from the website of Reserve Bank of India from 2008 to 2019. The authors employed the non-parametric DEA approach to estimate Malmquist total factor productivity index for each bank as well as across different ownership groups. The panel data estimation technique was used to identify the determinants of total factor productivity.FindingsThe results suggested that an increase in the technological shift raised the bank's productivity above the optimal frontier. Among the bank-specific determinants, the bank size and bank diversifications are significantly declining productivity, whereas credit-deposit ratio and return on asset significantly increasing productivity. Among the macro-specific determinants, inflation, growth rate and fiscal deficit ratio negatively affect productivity, whereas capital formation to the GVA ratio boosts the level of productivity.Research limitations/implicationsThe authors have used intermediate method to select the inputs and outputs as per the suitability to the context. However, the disaggregate level such as state and district level analysis can be done using production and value-added approaches to explore the regional variations of the banking performance. Furthermore, the parametric methods such as stochastic frontier analysis can be used to examine banking performance, which the authors left for the future research.Practical implicationsThis study suggested that banks should increase the economies of scale of their total assets and focus on the interest-earning activity. The banks need to proactively operate the business policy by following the changing path of inflation. The banks need to reduce their rate of fiscal-deficit to the GVA with the purpose to boost their level of productivity.Originality/valueThe study provides an important implication for bankers and policymakers in terms of heightening the banking performance during the period of dynamic economic events.

Sign in / Sign up

Export Citation Format

Share Document