Liquidity transformation: an examination of US life insurers

2016 ◽  
Vol 42 (7) ◽  
pp. 618-634 ◽  
Author(s):  
Byeongyong Paul Choi ◽  
Jin Park ◽  
Chia-Ling Ho
Keyword(s):  
Regression Model ◽  
Life Insurance ◽  
Insurance Industry ◽  
Financial Fragility ◽  
Crowding Out ◽  
Content Type ◽  
Life Insurers ◽  
Life Insurance Industry ◽  
The Us ◽  
The Impact

Purpose – The purpose of this paper is twofold: first, this paper measures how much liquidity is transformed by the US life insurance industry for the sample period; and Second, this study tests the “risk absorption” hypothesis and “financial fragility-crowding out” hypothesis to identify the impact of capital on liquidity creation in the US life insurance industry. In addition, a regression model is conducted to explore the relationship between liquidity creation and other firm characteristics. Design/methodology/approach – In order to construct the liquidity creation measures, all assets and liabilities are classified as liquid, semi-liquid, or illiquid with appropriate weights to these classifications, which will then be combined to measure the amount of liquidity creation. In addition, a regression model is analyzed. The level of insurers’ liquidity creation is regressed on the capital ratio (surplus over total assets) and other financial and organizational variables to test two prevailing hypotheses. Findings – This paper finds that the US life insurers de-create liquidity. The authors provide that the amount of liquidity de-creation is related to the size of insurers such that liquidity de-creation has increased as assets grow and that large insurers de-create most of liquidity. The US life insurance industry de-created $2.1 trillion in liquidity, i.e., 43 percent of total industry assets, in 2008. The empirical results support the “financial fragility-crowding out” hypothesis. Life insurers’ liquidity de-creation is mainly caused by the large portion of liquid assets, which is required by regulation and capital is not a main factor of liquidity de-creation. Originality/value – There is no known study on the issue of liquidity creation by life insurers. Thus, the extent of liquidity creation by the life insurance industry, if any, is an empirical matter to investigate, but also an important matter to regulators and the academia since the products and business operations (e.g. asset portfolio and asset and liability management) of life insurers are different from those of property and liability insurers.

The U.K. With-Profits Life Insurance Industry: A Market Analysis

2009 ◽  
Vol 15 (3) ◽  
pp. 747-777
Author(s):  
C. D. O'Brien
Keyword(s):  
Life Insurance ◽  
Economies Of Scale ◽  
Lower Cost ◽  
Insurance Industry ◽  
Significant Degree ◽  
Potential Effect ◽  
Market Analysis ◽  
Life Insurers ◽  
Life Insurance Industry ◽  
The Impact

ABSTRACTThis paper reviews the market structure of the U.K. with-profits life insurance market and the potential effect on how life insurers operate. We consider the competitiveness of the market, quantifying the increase in the degree of concentration since 2000, and establishing that inherited estates may offer some protection from competition for incumbent firms. However, there is a significant degree of mobility in market positions of leading firms. Analysis of costs indicates some large differences between firms, with larger firms experiencing lower cost ratios, indicative of economies of scale. There are some marked differences in insurers' prices, the data showing that charges tend to be lower on unit-linked than on with-profits policies. The paper suggests that while there are potential concerns about how the market operates for consumers, the impact is limited by the dramatic reduction in new with-profits business.

Antecedents and consequences of insurer-salesperson relationships

2014 ◽  
Vol 32 (4) ◽  
pp. 436-454 ◽  
Author(s):  
Tsu-Wei Yu ◽  
Feng-Cheng Tung
Keyword(s):  
Customer Loyalty ◽  
Life Insurance ◽  
Structural Equation ◽  
Insurance Industry ◽  
Content Type ◽  
Life Insurers ◽  
Life Insurance Industry ◽  
Antecedents And Consequences ◽  
Customer Trust ◽  
Depth Interviews

Purpose – The purpose of this paper is to explore the antecedents and consequences of insurer trust and salesperson trust, as well as the relationships between insurer, salesperson, and customer loyalty in order to build a conceptual model which investigates the relationships of insurer trust and salesperson trust, and finds ways to build trust and customer loyalty in the non-life insurance industry in Taiwan. Design/methodology/approach – The data for this study were collected from the customers of non-life insurers’ policyholder service centres and were analysed using in-depth interviews and questionnaires. Structural equation modelling (SEM) was to assess the proposed research model empirically. Findings – This study finds that firm size did not have a significant effect on insurer trust. Customer trust in the insurer was negatively but not significantly related to customer trust in the salesperson. Additionally, when relatives or friends are insurance salespersons; it is easy to build trust with them. Originality/value – This study provides non-life insurers with new avenues for promoting and marketing their insurance.

The role of salespeople in developing life insurance customer loyalty

2016 ◽  
Vol 44 (1) ◽  
pp. 22-37 ◽  
Author(s):  
Tsu-Wei Yu ◽  
Lu-Ming Tseng
Keyword(s):  
Relationship Quality ◽  
Customer Loyalty ◽  
Life Insurance ◽  
Structural Equation ◽  
Insurance Industry ◽  
Customer Relationship ◽  
Content Type ◽  
Life Insurers ◽  
Life Insurance Industry ◽  
Antecedents And Consequences

Purpose – The purpose of this paper is to closely investigate the antecedents affecting relationship quality and its consequences between life insurers and their customers. Design/methodology/approach – Data were collected from the customers of life insurers’ customer relationship management centres and were analysed using in-depth interviews and questionnaires. A structural equation modelling approach is employed to test the hypotheses. Findings – The findings are generally consistent with the literature. This study supports all hypotheses. Finally, the findings of this study confirm that relationship quality mediates the effects of salesperson characteristics and relational selling behaviour on customer loyalty. Originality/value – To the authors knowledge, there is little published research that examines antecedents and consequences of relationship quality in life insurance industry in Taiwan. Therefore, in addition to developing high-quality services, life insurers need to establish and maintain long-term relationships with customers in order to create corporate innovation value.

Managers’ perception of mobile technology adoption in the Life Insurance industry

2018 ◽  
Vol 31 (2) ◽  
pp. 507-526 ◽  
Author(s):  
Visvanathan Naicker ◽  
Derrick Barry Van Der Merwe
Keyword(s):  
Technology Adoption ◽  
Mobile Technology ◽  
Life Insurance ◽  
Perceived Risk ◽  
Insurance Industry ◽  
Demographic Variables ◽  
Perceived Usefulness ◽  
Content Type ◽  
Level Of Education ◽  
Life Insurance Industry

Purpose The purpose of this paper is to examine the factors that influence the adoption of mobile technology by considering the information technology (IT) managers’ perception. The research identified the key challenges managers faced and whether management would adopt mobile technology or not. Design/methodology/approach A quantitative approach was used for this research, whereby an explanatory research was utilised. Questionnaires were developed and distributed to respondents who were in management and leadership positions and who were responsible for IT within their organisations. Demographic variables of age, gender differences, level of education, level of experience and culture were tested for association to the perceived factors and adoption. A χ2 of association was used to test the association between demographic variables and mobile technology adoption. Findings The results found that perceived ease of use, perceived usefulness, perceived complexity and perceived cost are important factors for adoption. However, perceived risk was a key factor in the adoption of mobile technology. Mobile strategy adoption must consider perceived risk factors central to the adoption. The younger generation (20 to 40) years found it easier to adopt technology than the older generation of 41 years and older. Individuals with a post matriculation level of education understood the importance of risk and cost required for adoption. Research limitations/implications Purposive sampling from a single industry (Life Insurance) was used. Limited literature was available regarding managers perception of mobile technology adoption in the Life Insurance industry. Practical implications The research offers managers insight into the important factors that need to be considered in adopting mobile technology. Originality/value With mobile technology being pervasive, the research seeks to provide managers with the insight in managing the adoption of the technology.

Bank capital and liquidity creation: evidence of relation from India

2017 ◽  
Vol 11 (2) ◽  
pp. 152-166 ◽  
Author(s):  
Muhammad Umar ◽  
Gang Sun ◽  
Muhammad Ansar Majeed
Keyword(s):  
Balance Sheet ◽  
Capital Requirements ◽  
Financial Fragility ◽  
Crowding Out ◽  
Bank Capital ◽  
Content Type ◽  
Crisis Period ◽  
Balance Sheet Liquidity ◽  
Indian Banks ◽  
The Impact

Purpose This study analyzes the impact of changes in bank capital on liquidity creation. More specifically, it tests “financial fragility – crowding out” and “risk absorption” hypotheses for Indian banks. Design/methodology/approach It uses the data of 136 listed and unlisted banks, ranging from the year 2000 to 2014. The analysis is based on panel data techniques. Findings There is negative relationship between narrow measure of bank liquidity creation and capital. Therefore, in the case of India, “financial fragility – crowding out” hypothesis holds for “cat nonfat” measure of liquidity creation. However, there is no relationship between “cat fat” measure of liquidity creation and capital, except for listed banks, and the banks in the pre-crisis period. In these two cases, “risk absorption” hypothesis holds. Furthermore, none of the hypotheses holds in the post-crisis period. Practical implications The higher capital requirements posed by the Basel III will result in lower on-balance-sheet liquidity creation, which may result in lower profitability for the banks. However, increase in capital does not affect off-balance-sheet liquidity creation, rather enhances it in case of listed banks. So, the managers may use risky off-balance-sheet liquidity creation to improve profitability. Therefore, the regulators must be vigilant to the off-balance-sheet activities of banks to avoid banking turmoil. Originality/value To the best of authors’ knowledge, this is the first study to explore which hypothesis regarding the relationship between bank capital and liquidity creation holds for Indian banks. It contributes to the existing literature by providing the empirical evidence that “financial fragility – crowding out” hypothesis holds for on-balance-sheet liquidity creation and “risk absorption” hypothesis holds for listed banks. It also points to the new direction that neither of the hypotheses holds in the post-crisis period in India.

Determinants of Derivative Usage in the Life and General Insurance Industry: The Australian Evidence

2003 ◽  
Vol 06 (04) ◽  
pp. 405-431 ◽  
Author(s):  
Marc De Ceuster ◽  
Liam Flanagan ◽  
Allan Hodgson ◽  
Mohammad I. Tahir
Keyword(s):  
Life Insurance ◽  
Insurance Industry ◽  
Cost Effective ◽  
Insurance Companies ◽  
Long Tail ◽  
Life Insurers ◽  
Market Risks ◽  
Life Insurance Industry ◽  
General Insurance ◽  
Standard Operating

Core business and financial market risks are not easily reduced by standard operating procedures in insurance companies. Derivatives theoretically provide a cost effective vehicle to hedge these risks. This paper provides an empirical analysis of the determinants of derivative usage as well as the extent of derivative usage in the Australian insurance industry in both life and general insurance companies for the period 1997–1999. Empirical results for the Australian life insurance industry in general confirm the findings of UK and US based research. However, the Australian general insurance industry does not appear to follow the conclusions of previous literature. Our results indicate that for life insurers, the determinants of derivative usage were size, leverage and reinsurance. For the general insurance industry the determinants were size and the extent of long tail lines of business written. As regards the determinants of the extent of derivative usage, these were size and asset-liability duration mismatches for life insurers. For the general insurance industry the determinants of the extent of derivative usage were size, the extent of long tail lines of business written, and the reporting year.

scholarly journals The Impact of Internal Factor Analysis Summary (IFAS) and Competing Power on Performance in the Life Insurance Industry: The Mediating Role of Competitive Advantage

2018 ◽  
Author(s):  
Ratna Dewi ◽  
Amir Mahmud
Keyword(s):  
Factor Analysis ◽  
Competitive Advantage ◽  
Life Insurance ◽  
Insurance Industry ◽  
Internal Factor ◽  
Mediating Role ◽  
Life Insurance Industry ◽  
Competing Power ◽  
The Impact

This research aim to test and analyze the impact of internal factor analysis summary (IFAS) and competing power on performance in the life insurance industry in Makassar (Indonesia): The mediating role of competitive advantage. This study uses 60 employees of insurance companies at the manager level. Path analysis results provide evidence that the internal factor analysis summary (IFAS) and competitiveness significantly influence the competitive advantage and performance in the life insurance industry. The role of competitive advantage proved able to mediate the effect of internal factor analysis summary (IFAS) in improving the performance in the life insurance industry. The different conditions with competitive advantages that cannot increase the competing power against performance in the life insurance industry

scholarly journals The Impact of Internal Factor Analysis Summary (IFAS) and Competing Power on Performance in the Life Insurance Industry: The Mediating Role of Competitive Advantage

2018 ◽  
Vol 4 (1) ◽  
pp. 85
Author(s):  
Ratna Dewi ◽  
Amir Mahmud
Keyword(s):  
Factor Analysis ◽  
Competitive Advantage ◽  
Life Insurance ◽  
Insurance Industry ◽  
Internal Factor ◽  
Mediating Role ◽  
Life Insurance Industry ◽  
Competing Power ◽  
The Impact

This research aim to test and analyze the impact of internal factor analysis summary (IFAS) and competing power on performance in the life insurance industry in Makassar (Indonesia): The mediating role of competitive advantage. This study uses 60 employees of insurance companies at the manager level. Path analysis results provide evidence that the internal factor analysis summary (IFAS) and competitiveness significantly influence the competitive advantage and performance in the life insurance industry. The role of competitive advantage proved able to mediate the effect of internal factor analysis summary (IFAS) in improving the performance in the life insurance industry. The different conditions with competitive advantages that cannot increase the competing power against performance in the life insurance industryindicate that from each sector, agriculture, forestry, mining fishery, excavation, processing industry and trade are very strong together that is equal to 97,70%, besides coefficient value of determination equal to 0,96% whereas the remaining 4% of the poverty rate is influenced by other factors

Performance Benchmarking of the Indian Life Insurance Industry

2015 ◽  
pp. 616-625
Author(s):  
Ram Pratap Sinha ◽  
Nitish Datta
Keyword(s):  
Technical Efficiency ◽  
Life Insurance ◽  
Insurance Industry ◽  
Operating Performance ◽  
Insurance Companies ◽  
Unified Framework ◽  
Performance Benchmarking ◽  
Life Insurers ◽  
Life Insurance Industry ◽  
The Mean

In the last decade, the life insurance companies operating in India have made significant progress in terms of business consolidation. In view of the same, it is of interest to make an enquiry about the operating performance of these companies. This chapter compares 15 life insurance companies operating in India from the period 2005-06 to 2008-09 using the Hybrid Efficiency Model (Tone, 2004). The Hybrid Model provides a unified framework for the estimation of technical efficiency integrating the radial and non-radial characterisation of inputs and outputs. Out of the 15 in-sample life insurance companies, the number of technically efficient life insurers declined from 9 in 2005-06 to 4 in 2006-07 and further to 3 in 2007-08 and 2008-09. The mean technical efficiency scores of the in-sample life insurers declined sharply between 2005-06 and 2006-07 and improved somewhat thereafter.

Sign in / Sign up

Export Citation Format

Share Document