The purpose of this research is to investigate the factors that affect the financial performance of the life insurance sector in Pakistan. Possible internal and external factors that include liquidity, net premium, and premium growth, underwriting risk, debt to equity, insurance leverage, tangibility, equity capital, capital surplus, Gross Domestic Product (GDP), inflation and market share have been used to assess their effect, whereas sector Return on Assets (ROA) has been used to assess the performance. The data has been gathered from 2008 to 2017 from 09 life insurance companies including 01 public and 08 private life insurance companies. In these observations, there are 02 companies that solely conduct their business on takaful life insurance while others are conventional based or both. Results have been analyzed using panel regression to panel the ordinary least square regression model and the generalized method of the moment is used to estimate the results. The outcome of this study shows that tangibility, market share, net premium, insurance leverage and GDP is insignificantly or negatively related to the financial performance of Pakistani Life Insurance Company, whereas, the other independent variables such as liquidity, underwriting risk, debt to equity, equity capital, capital surplus and inflation are positively and significantly related. This research should support the insurance industry in increasing their premium collecting activities and active participation in the market through increased awareness of life insurance to its beneficiary. The newcomers can also use this research as a beneficial survey for capturing the market. This research may also prove handy for the shareholders/investors and/or also for the insured to find out soundness and solvency of their insurer.Contribution/ Originality: This study aims to contribute in the existing literature in giving an insight into Pakistan"s Life Insurance Business with the objective of finding out the effect of certain selected variables on the financial performance of the insurance sector; thereby helping the insured/insurers and the investors in particular in taking informed investment/business decisions.
However, the term "privatisation" is widely believed to have first been used by Mr John Diebold, an American policy maker, who used this term during his campaign to transfer a government owned service from the public sector to the private sector in the USA (Lord, 1987). According to the Economist magazine the term "privatisation" appeared in print for the first time in the Economist in the early 1970s. Privatisation can be considered as an umbrella term which can be used to denote a scale of policy initiatives in different countries with different modes and motives. The word "privatise" itself can be taken to mean the opposite of nationalise, i.e. as the transfer of ownership of state enterprises to the private sector. Privatisation can also be defined in simple terms such as "the process by which governments sell their state owned enterprises (SOEs), completely or in blocks of shares, to private investors, local and foreign" Megginson and Netter (2001) document that privatisation as a political, social and economic policy can be taken to mean "the deliberate sale by a government of state-owned enterprises (SOEs) or assets to private economic agents". Overall, from the above definitions, privatisation can be described as a political, social and economic process, which leads to change in ownership structure of the enterprise from the state to the private sector. In addition, privatisation encourages the private sector to play a vital role alongside the public sector in reducing the level of government intervention in terms of planning, regulation and subsides. 2. THE SPREAD OF THE PRIVATISATION PHENOMENON THROUGHOUT THE WORLD Over the last four decades, there has been a widespread change of opinion regarding the role of state and private enterprises in promoting economic growth. Despite the fact that SOEs are the most common example of privatisation, it must be noted that governments can also privatise land, housing (which has been done in the UK) and even services and utilities such as banking, insurance, education, road construction, maintenance, water, electricity and other services that have been privatised in different countries by contracting out to private companies. More important than understanding privatisation itself as a process is understanding its underlying rationale that there are limits to what governments can provide and that some economic undertakings, especially industrial companies, are tackled more efficiently by the private sector.. It was mentioned earlier that it was the UK that pioneered privatisation. It was the UK also which in many cases pioneered the growth of the state sector among private enterprise economies. It was undoubtedly British teaching which inspired many countries of her previous empire to follow the course of public sector economics and centralised planning. It is hard to find a country that has not experienced privatisation of some kind or another. While the privatisation trend, historically, is usually associated with the UK, the first "denationalisation" programme occ...
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.