Table 4 - uploaded by Stephen Letza
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... income is an important source of revenue for all life insurance companies because the cash inflow from investments can be used, at least in part, to pay for annual expenditures without resorting to the sale of underlying assets. As shown in Table 4, the mutual companies in our sample outperformed the proprietary companies during the period 1995-96 in this area too. Expressing investment income as a proportion of premium income gives a ratio of 0.71 for mutuals, but only 0.61 for the proprietary companies, though this difference is actually not significant at the 5 per cent level (t = ...
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... The key to most economists is efficiency. [7] It is assumed efficiency leads to profit maximization. Efficiency is compromised when the agent breaches the principal's mandate (ibid). ...
... Efficiency is compromised when the agent breaches the principal's mandate (ibid). Hardwick and Letza [7] emphasised the need to maximise both the principal and the agent's utility whilst recognizing the fact that the former and latter, by their nature, are on opposite extremes. Thus a need arises for congruency between the principal and the agent's goals. ...
The paper examined the agent and stewardship models in light of corporate governance breaches in Zimbabwe’s SOEs in the ICT sector. SOEs have been plagued with accusations of poor corporate governance practices. In the agent and steward theory,directors as dictated by Zimbabwe’s Companies And Other Business Entities Act [Chapter 24:31] (2020) and Zimbabwe’s Public Entities and Corporate Governance Act [Chapter 10.31] (2018) are deemed to be agents and stewards respectively, care takers, thus having the common law duties of care, trust and acting in outmost good faith on behalf of the company. Zimbabwe has seven SOEs in the ICT sector, this paper inductively assessed the four major ones namely, NetOne, TelOne, Powertel, and Telecel.The paper was guided by the two forenamed statutes which govern the four SOEs. It identified the key tenet duties of a director from the statutes, anchored by the agency theory and the stewardship theory perspectives in governance vis a vi the interviews executed on the four SOE boards and the State actors. The interviews identified the breaches in corporate governance in the boards. These were in turn examined in the eyes of the agent and stewardship models. The paper revealed that these two models, whilst ideal are susceptible to breaches, creating a hub for corporate malfeasances and defected agents. Good corporate governance equates good business. It sends a good signal to the outside world of prospective investors.
... The fewer studies on insurance companies are published in specialist journals and when conducted in non-Anglo-Saxon countries, they are characterized by smaller survey samples (Fekadu, 2015;Garba & Abubakar, 2014;Gugong, Arugu, & Dandago, 2014;Hidayat & Firmansyah, 2017;Ibe, Okanya, & Ogochukwu, 2017;Jeng & Lai, 2005;Kader, Adams, & Hardwick, 2010;Lee, Cheng, Har, Md Nassir, & Ab Razak, 2019;Li, Zhang, Tsai, & Qiu, 2017;Najjar & Salman, 2013;Sandada, Man-zanga, & Shamhuyenhanzva, 2015;Wang, Jeng, & Peng, 2007). Studies in developed countries concern almost exclusively the United States, the United Kingdom (Hardwick & Letza, 1999O'Sullivan & Diacon, 1999 and only a few other European countries (Deev & Khazalia, 2017;Eling & Marek, 2014;Genetay, 1999;Lambalk & de Graaf, 2017;Pavi Kramari, Aleksic, & Pejic-Bach, 2018;Pullano, 2011;Venuti & Alfiero, 2016). More recently, the research has been extended to companies following Islamic precepts (Fekadu, 2015;Kader et al., 2010;Kader, Adams, Hardwick, & Kwon, 2014;Karbhari, Muye, Hassan, & Elnahass, 2018;Lee et al., 2019;Markonah, Sudiro, & Rahayu, 2019;Najjar & Salman, 2013;Ng, Chong, & Ismail, 2012) However, a focus on insurance research on governance contributes to enriching the results of the wider research strand with thanks to the specific features of the insurance companies. ...
... Consequently, in such companies, there is generally greater discretion and risk in strategic and management decisions, greater CEO power, as well as different skills required for decision-making bodies and internal board committees (Adams & Jiang, 2017b;Diacon & O'Sullivan, 1995). It is therefore possible to define the field of investigation according to the ownership structure, on the one hand, and the production specialization, on the other hand, and still have sufficiently populated and representative samples both in the life (Cheng, Elyasiani, & Jia, 2011;Connelly, 2004;Hardwick & Letza, 1999;Mayers & Smith, 1992;O'Sullivan & Diacon, 2003) and in any of non-life risk class (Adams & Jiang, 2017b;Ho, Lai, & Lee, 2013;Hsu, Huang, & Lai, 2015;Lambalk & de Graaf, 2017;Miller, 2011); 6) The extreme complexity of the insurance business requires specialist skills of various kinds (legal, actuarial, technical and financial) as well as knowledge of business, regulation and specific experience (Adams & Jiang, 2017b;Hardwick, Adams, & Zou, 2011). The focus of studies on this area allows to see, more than in other areas, whether and how much the quality characteristics of the Board and the CEO affect the effectiveness of governance. ...
This paper provides a review of theoretical contributions and empirical studies on the external and internal mechanisms of corporate governance of insurance companies and their effects on performance and/or risk. Thanks to the analysis of the studies published between 1985 and 2019 through bibliometric tools, we are able to illustrate the networks of scientific collaborations (co-authorship) and relationships between the most used terms, also highlighting the most significant groups of scholars and research strands. Additionally, the paper carries out a meta-analysis of around thirty quantitative articles that show a relationship between the quantitative-qualitative characteristics of the Board of Directors and the performance of the insurance company. The empirical studies show a consensus on the positive contribution of board size and the presence of independent directors on performance. Moreover, insurance research networks do not appear to be very interconnected, especially as regards to emerging markets. The paper also provides a useful starting point for future research aimed at defining the specificities of the governance-performance relationship of insurance companies within an evolving regulatory and market framework.
... She also calculates expense ratios as the ratio of expenses plus commission to premiums, and finds that mutuals have a significantly lower expense ratio. Hardwick & Letza (2000) examined 37 mutual and 63 proprietary companies over the five years 1992-96, making 500 data points. Most of their results, summarised inTable 1, are self explanatory. The index of diversification (a Herfindahl index) is the sum of S j 2 for each of the four main lines of business (life insurance and general annuities, pensions, permane ...
Using a system of simultaneous equations, this study examines the relation among external audit monitoring, in the US life insurance industry. We find insurers with higher leverage risk and surplus risk are more likely to use Big‐4 auditors and to pay higher fees. In return, insurers hiring Big‐4 auditors and paying higher audit fees have lower leverage risk and surplus risk. Second, the results suggest that mutual life insurers have a higher leverage risk and surplus risk than stock life insurers. This evidence is in contrast to that for property–liability insurance companies. Third, we find insurers are less likely to hire Big‐4 auditors and to pay higher audit fees after implementation of the Sarbanes–Oxley Act (SOX). Finally, life insurers with Big‐4 auditors or paying higher audit fees are more likely to take lower risks after the implementation of SOX.
