Abstract
A fuzzy Data Envelopment Analysis model is adopted in this paper to assess the operational efficiency of life insurance companies in Taiwan. The study was conducted from 2008 to 2012 and the data were taken from Taiwan Economic Journal and related financial statements provided by the Taiwan Insurance Institute. The results indicate that the operational efficiency of insurance companies affiliated to financial holding companies appears to be better than that of insurance companies not affiliated with financial holding companies, signifying that the synergy generated after a financial holding company is formed and the cross-selling between its subsidiary groups are highly beneficial to the management of a life insurance company affiliated to such a financial holding company. The chief contribution of this paper is that, in the past, the data envelopment analysis models applied often could not calculate due to missing input and output data. The study adopts the fuzzy linear mathematics to solve the uncertainty.
Highlights
Unable to cope with business losses over the years, MetLife Taiwan started to dismiss its conventional business sections at the end of 2006 and began to consider selling the company
The empirical results showed that the metatechnology ratio of old local insurance companies and foreign insurance companies was significantly higher than that of new insurance companies
Hu et al (2012) adjusted the negative values of input or output items and the empirical Data envelopment analysis (DEA) results indicated that the efficiency value of insurance companies affiliated with financial holding companies and foreign life insurance companies was better
Summary
Unable to cope with business losses over the years, MetLife Taiwan started to dismiss its conventional business sections at the end of 2006 and began to consider selling the company. In 2001, the Financial Holding Company (FHC) Act was passed and enforced in November the same year It greatly reduced the restrictions on cross-industry operations between financial institutions, making it possible for banks, securities firms and insurance companies, subsidiaries of financial holding companies, to reduce operating costs and maximize the benefits of consolidated management through cross selling, exchange and use of information, and equipment sharing. There are 30 life insurance companies in Taiwan and most of them have not yet gone public; collection of complete input and output data is not easy This has led to the idea of using the fuzzy DEA applied by Kao and Liu (2000, 2004) to explore the management performance of life insurance companies in Taiwan. It is hoped that these results can serve as referential management performance indexes for the general public, investment organizations, and supervising agencies
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