A Study of the Financial/Business Performance and Market Share of Non-Life Insurance Industry in Taiwan

Abstract

This research explores the effect of financial and business performance to market share of non life insurance companies in Taiwan from 2005 to 2011. First, apply factor analysis to extract seventeen financial ratios into four factors which are defined as “risk assumption ability,” “investment performance,” “underwriting quality,” and “business ability.” The factor scores are calculated for the comparison of financial and business performance between domestic and foreign companies, under different systems, before and after financial crisis by One-Way ANOVA. The results find out the risk assumption ability, investment performance of domestic companies are significantly superior to foreign companies, but domestic companies in underwriting quality aren’t as good as foreign companies. The investment performance of companies under financial holding system is superior to non-financial holding system. The parameter estimate of fixed effects model show domestic companies have higher market shares than foreign companies and the business ability was significant in the domestic model. The results also show that the “risk assumption ability”, “underwriting quality” and “investment ability” significantly affect market share in financial holding system and non-financial holding system, but “business ability” does not affect market share under different systems.