Abstract: The
purpose of this paper is to discuss Financial Changes in Insurance Sector of
Pakistan (2001 to 2010). Mainly this study discussed changes in profitability
of insurance sector of Pakistan before taxation as well as changes in sales of
insurance sector of Pakistan over the decade. This study finds out consistency
of Paid-up-capital, numbers of Shares, equity, total assets, sales, profit
before tax and profit after tax over the decade. Changes and modifications in
following variables also presented graphically in this paper.
Introduction: Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some
forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event. In most cases, the
policy holder pays part of the loss (called the deductible), and the insurer pays the rest.
Types of Insurance:
·
Travel
insurance: To cover you in case you lose your
luggage, miss your plane or train.
·
Vehicle
insurance: To cover your vehicle’s accidental
damages or if your vehicle is stolen.
·
Home
buildings insurance: To cover your home in case of fire and
other defined events.
·
Contents
Insurance: To cover your property in case of burglary, fire
and other defined events.
·
Health
insurance: To cover you for injury, or medical or
dental treatment.
·
Life
insurance: To cover you if you can’t work due to an
accident or illness, or if you die.
·
Consumer
credit insurance: To cover you if you can’t repay some of
your loan because you are unable to work.
Some reasons to insure:
·
Insurance can help you replace something
you own and could not afford to replace. For example, if your home was
destroyed in a fire, you would need a big lump sum to rebuild it.
·
Insurance can protect you from something
that might not happen, but which would be bad for you if it did. For example,
if you were injured in an accident and couldn’t work anymore, you would need
money to live on.
·
Insurance can help you pay off a debt if
something you’ve bought with a loan is damaged or destroyed. For example, if you
took out a loan to buy a car and the car was written off in an accident, you
would need money to pay off the loan.
Insurance Sector in Pakistan
The
business of insurance in Pakistan has been regulated under the Insurance Act,
1938. In order to implement and administer the provisions of the aforesaid Act,
the Government established the Department of Insurance, in April 1948, as a
department of the Ministry of Commerce, headed by a Controller of Insurance.
Until eventual implementation of the new law of insurance, namely, Insurance
Ordinance, 2000 which has only recently been enacted, the insurance industry
has continued to be regulated by the Controller of Insurance.
MAIN FEATURES OF INSURANCE ORDINANCE, 2000
§ The Ordinance provides for regulation of Insurance Industry by an
autonomous body i.e. the Commission replacing the institution of Controller,
Department of Insurance.
§ The insurance business has been bifurcated into two main
divisions,
o Life Insurance Business; and
o Non-Life Insurance Business. Each of these two divisions has
further been divided into different classes.
§ Capital requirements for life insurance and non-life insurance
companies have been raised from Rs. 100 million to Rs. 150 million and from Rs.
40 million to Rs. 80 million respectively.
§ The minimum solvency margin has not been fixed and is to be
prescribed under the rules from time to time.
§ Enforcement of the insurance law has been made more effective by
giving to the Commission powers of investigation and issuance of directives.
§ Detailed provisions have been made to prevent insurers from
indulging in practices prejudicial to the interest of policyholders.
§ Provision has been made for the institution of an Insurance
Ombudsman who shall have the authority to investigate mal-administration of insurance
companies and to redress grievances of the insurers.
§ Provision has been made for the constitution of an Insurance
Tribunal, which shall have, civil as well as criminal jurisdiction.
§ Special provisions have been made for the establishment of a Small
Disputes Resolution Committee for speedy settlement of minor claims.
§ Penal provisions for contravention of the insurance law have been
made stricter.
§ Reinsurance arrangements have been strengthened and rules would be
made for reinsurance arrangements even outside Pakistan.
§ Life insurance business companies are required to maintain
separate funds for separate classes of their business.
§ Adequate disclosure requirements by insurance companies have been
prescribed for purposes of reporting to the regulator.
Literature
Review:
The
Growth Rates of Private Health
Insurance Premium were analyzed by Feldstein ET. AL (1995) for a selected
sample of 95 insured groups over the period 1985 to 1992. The result of this
study describes that during this time period, premiums increased by
approximately 150% in nominal terms and by 45% in real terms. The observed rate
of growth was not constant over time, however. The most rapid growth occurred
during the years 1986 to 1989; thereafter, the rate of increase in premiums declined.
Further, this analysis suggests that the insurance underwriting cycle may play
an important role in influencing insurance premium growth rates. These results
support the belief that health maintenance organization induced competition has
potential to control the rate of increase in health care costs.
The study titled “A Review of
Insurance Sector and HRM/HRD Aspects” by PROF. DR. KHAWAJA AMJAD SAEED in 2007 describes that Insurance
Sector has registered a very slow growth in the history of Pakistan. Based on
this research study, the following conclusions emerged:
1. Listed
insurance sector on Karachi Stock Exchange in terms of companies is only 4.4%.
2. Share
of listed insurance sector on total listed companies on Karachi Stock Exchange
is only 1.41%.
3. Out
of 637 listed companies, only 29 relate to insurance sector.
4. From
the birth of Pakistan till now we have added only 29 listed companies- giving
us a ratio of less than 0.5 per company per year.
5. Turnover
for 10 months (January – October 2007) on the Karachi Stock market was only
1.55% of the total turnover.
6. Share
of insurance sector on listed companies on Karachi Stock Exchange is only 3.83%
in respect of Market Capitalization.
7. Share
of insurance in GDP of Pakistan is only 1.80%. Ten percentage companies’ shares
are listed below par. Therefore, these are sick. They need revival.
A research paper written by
Robert Cull, Lemma W. Senbet, Marco Sorge in Feb, 2005, that paper has provided empirical evidence on the impact of deposit
insurance on banking sector development and stability. We use a unique dataset
capturing a variety of deposit insurance features, such as coverage, entry
hurdles, premium structure, etc. The empirical construct is guided by recent
theories of banking regulation that employ an agency framework. The basic moral
hazard problem studied is the incentive for depository institutions to engage
in excessively high-risk activities, relative to socially optimal outcomes, in
order to increase the option value of their deposit insurance guarantee. Overall
we find empirical evidence to be consistent with this theory. Generous
government-funded deposit insurance tends to have a negative effect on
financial development and growth except in countries where the rule of law is
well established and both sufficient supervisory discretion and independence
from legal reprisal are in place. Thus, the main conclusion of this paper is
that the introduction of generous depo-sit insurance schemes in countries
lacking adequate bank supervision and rule of law might not help but rather be
an obstacle for financial system stability and development.
A research paper written by Krishna
Gopal Menon and David D. Williams in April, 1994, that paper provides some empirical tests of the insurance hypothesis of
auditing. The disclosure of L&H's bankruptcy are attributable to the
absence of the expected insurance coverage, i, rather than to problems of
monitoring introduced by the bankruptcy of the auditor. III. Conclusion This
paper provides some empirical tests of the insurance hypothesis of auditing.
The disclosure of L&H’s bankruptcy was found to have a negative impact on
L&H client stock prices. There was no corresponding increase in stock
prices on announcement of a replacement auditor. The value of the expected
insurance coverage, i, included in the price of the stock, was hypothesized to
vary with the magnitude of losses previously sustained by the security and with
the security's classification either as an IPO or as a seasoned security. These
hypotheses were supported empirically. Overall, the results of the paper
suggest that auditors are viewed by investors as guarantors of financial
statements, and in a sense, as guarantors of investments. Investors appear to
be willing to pay a premium for the right to recover potential investment
losses from auditors through litigation. These findings have important
implications.
A
research study conducted by Jonathan Gruber in Dec, 2001, that provide a key question or
understanding the determinants of health insurance coverage, as well as the
broader impacts of tax reform, is the sensitivity of insurance decisions to tax
subsidies. The findings in this paper suggest that this sensitivity is
significant. In particular, we find that
the firm's decision to offer insurance is sizeabley affected by the tax price
of insurance; the implied elasticity of firm offering with respect to taxes is -0.7.
This confirms the conclusion from other recent work that employers are very
sensitive to tax incentives in their decisions to offer insurance. we also find
that taxes appear to exert little independent influence on worker take up
decisions. This is consistent as well with other findings that worker take up
of insurance is not price elastic.
A
research study conducted by Bradley Herring and Mark V. Pauly in 2001, the results of this study of a large sample
of individual insurance purchasers the mid-to-late-90s are highly consistent
with those exhibited in our earlier work using a smaller sample of purchasers
the late-80s. Premiums are not very strongly related to risk, and the risk
associated with differences in health status (other things equal) has no
detectable relationship to premiums buyers actually paid-whatever it might do
to the premiums some insurers quote. Somehow, high-risk individuals in the
individual market who do end up buying insurance pay premiums not very
different from those charged to average risks.
Empirical
Results:
A
histogram is one of the basic quality tools. It is used to graphically represent
and summarize and show the distribution and variation of a process data set.
This
graph shows that the insurance companies of Pakistan gain maximum profit before
tax in year 2002 and year 2003 is on the second number. Unfortunately it started
declining from 2005 to 2009 and in year 2009 it has the minimum mean value.
On the other
hands, Sales graph is showing that, the companies Average Sales were maximum in
year 2001 but after year 2001, it continuously start declining in every year
till 2007 and then again sale increase gradually from 2009 to 2010. Sales graph
is showing the minimum value in 2007.
This
line chart shows that the Paid-up capital is slightly increasing from year 2001
to year 2008 but year 2009 and year 2010 was declining period. And the line of
equity is following the line of paid-up capital. 
In 2001 the mean value of
Total assets was nearly 5 million and year 2002 to year 2009 was rising period,
suddenly in 2010 it rapidly decreased. As it is from year 2001 to year 2007 the
Profit before tax and Profit after tax was increased but 2009-2010 was
decreasing period.
Year
|
X bar
|
S.D
|
C.V
|
|
PAID-UP
CAPITAL
(Rs. In Mill)
|
2001
|
97.21
|
113.47
|
116.73
|
2002
|
124.51
|
139.35
|
111.92
|
|
2003
|
135.76
|
157.37
|
115.97
|
|
2004
|
196.45
|
186.81
|
95.09
|
|
2005
|
163.12
|
177.99
|
109.12
|
|
2006
|
186.72
|
208.16
|
111.49
|
|
2007
|
307.93
|
250.9
|
81.48
|
|
2008
|
51.57
|
365.32
|
708.46
|
|
2009
|
452.65
|
579.19
|
127.96
|
|
2010
|
541.41
|
590.32
|
109.03
|
|
Total
|
2257.33
|
2768.88
|
1687.25
|
|
NO. OF SHARE
(Rs. In mill)
|
2001
|
10.71
|
12.75
|
119.08
|
2002
|
13.79
|
15.25
|
110.6
|
|
2003
|
15.21
|
17.38
|
114.29
|
|
2004
|
21.99
|
20.51
|
93.24
|
|
2005
|
18.11
|
20.12
|
111.1
|
|
2006
|
20.82
|
23.73
|
113.98
|
|
2007
|
32.5
|
25.58
|
78.69
|
|
2008
|
5.16
|
18.01
|
349.35
|
|
2009
|
4.48
|
57.15
|
1275.33
|
|
2010
|
56.85
|
58.8
|
103.44
|
|
Total
|
199.62
|
269.28
|
2469.1
|
|
EQUITY (Rs. In
mill)
|
2001
|
141.11
|
175.59
|
124.44
|
2002
|
220.32
|
303.09
|
137.57
|
|
2003
|
253.49
|
377.61
|
148.96
|
|
2004
|
360.43
|
376.09
|
104.35
|
|
2005
|
361.39
|
614.67
|
170.09
|
|
2006
|
739.14
|
1685.44
|
228.03
|
|
2007
|
1148.79
|
2962.86
|
257.91
|
|
2009
|
1904.13
|
3518.79
|
184.8
|
|
2010
|
2177.2
|
3544.44
|
162.8
|
|
Total
|
7306
|
13558.58
|
1518.95
|
|
TOTAL ASSETS
(Rs. In Mill)
|
2001
|
460.04
|
798.6
|
173.59
|
2002
|
710.35
|
1279.2
|
180.08
|
|
2003
|
1021.92
|
1725.33
|
168.83
|
|
2004
|
1579.88
|
2090.08
|
132.29
|
|
2005
|
1261.83
|
2334.63
|
185.02
|
|
2006
|
1861.71
|
3395.31
|
185.02
|
|
2007
|
2608.75
|
5466.39
|
209.54
|
|
2009
|
4259.41
|
6826.42
|
160.27
|
|
2010
|
5559.12
|
8274.15
|
148.84
|
|
Total
|
19323.01
|
32190.11
|
1543.48
|
As we know that Coefficient of Variation is used for checking the
consistency; the table shows that PAID-UP
CAPITAL was most consistent in 2007 because the C.V value is 18.48 which is
minimum value as compare to other years. Same as NO. OF SHARES is also showing consistency in 2007 and EQUITY was consistent in 2004 as
compared to other. TOTAL ASSETS also have similar results to EQUITY.
SALES
(Rs. In mill)
|
2001
|
263.58
|
63.73
|
239.67
|
2002
|
286.12
|
601.58
|
210.25
|
|
2003
|
373.55
|
720.3
|
192.82
|
|
2004
|
478.99
|
903.83
|
188.7
|
|
2005
|
473.62
|
1129.35
|
238.45
|
|
2006
|
854.89
|
2088.72
|
244.33
|
|
2007
|
869.32
|
2364.32
|
273.56
|
|
2009
|
959.34
|
2225.77
|
232.01
|
|
2010
|
1012.34
|
1833.04
|
181.04
|
|
Total
|
5571.75
|
11930.64
|
2000.83
|
|
PROFIT BEFORE
TAX
|
2001
|
5.51
|
93.6
|
1697.5
|
2002
|
50.88
|
98.75
|
194.08
|
|
2003
|
75.38
|
116.14
|
154.08
|
|
2004
|
117.27
|
141.27
|
121.04
|
|
2005
|
153.41
|
293.6
|
191.38
|
|
2006
|
399.01
|
1335.41
|
334.68
|
|
2007
|
1136.55
|
2968.4
|
261.18
|
|
2009
|
166.49
|
597.94
|
359.14
|
|
2010
|
179.04
|
288.59
|
161.19
|
|
Total
|
2283.54
|
5933.7
|
3474.27
|
|
PROFIT AFTER
TAX
|
2001
|
-0.18
|
92.18
|
-52081.8
|
2002
|
29.29
|
52.73
|
180.02
|
|
2003
|
59.21
|
99.58
|
168.17
|
|
2004
|
89.88
|
108.93
|
121.2
|
|
2005
|
130.44
|
255.31
|
195.73
|
|
2006
|
380.52
|
1329.4
|
349.37
|
|
2007
|
1115.72
|
2975.19
|
266.66
|
|
2009
|
143.37
|
568.16
|
396.3
|
|
2010
|
144.75
|
258.25
|
178.41
|
|
Total
|
2093
|
5739.73
|
-50226
|
SALES showing consistency in year 2010 and in 2010 the value of C.V is 181.04 which is minimum as compare to
other. PROFIT BEFORE TAX was
consistence in 2004. PROFIT AFTER TAX
showing consistency in 2001.
ANOVA
|
||||||
Sum of Squares
|
df
|
Mean Square
|
F
|
Sig.
|
||
Paid-up capital (Rs. In mill
|
Between Groups
|
6484528.190
|
9
|
720503.132
|
7.965
|
.000
|
Within Groups
|
24152085.227
|
267
|
90457.248
|
|||
Total
|
30636613.417
|
276
|
||||
No. of Share (Rs. In mill)
|
Between Groups
|
73147.266
|
9
|
8127.474
|
9.156
|
.000
|
Within Groups
|
276059.421
|
311
|
887.651
|
|||
Total
|
349206.687
|
320
|
||||
Equity (Mill)(Rs. In mill)
|
Between Groups
|
161000986.613
|
8
|
2.013E7
|
5.658
|
.000
|
Within Groups
|
857157124.965
|
241
|
3556668.568
|
|||
Total
|
1018158111.577
|
249
|
||||
Total assets (Rs. In mill)
|
Between Groups
|
612213264.216
|
8
|
7.653E7
|
4.929
|
.000
|
Within Groups
|
3741780221.163
|
241
|
1.553E7
|
|||
Total
|
4353993485.379
|
249
|
||||
Sales (Mill) (Rs. In mill)
|
Between Groups
|
37168130.701
|
8
|
4646016.338
|
2.158
|
.031
|
Within Groups
|
518864388.523
|
241
|
2152964.268
|
|||
Total
|
556032519.224
|
249
|
||||
Profit before tax (Rs. In mill)
|
Between Groups
|
33786152.015
|
8
|
4223269.002
|
3.701
|
.000
|
Within Groups
|
288736585.525
|
253
|
1141251.326
|
|||
Total
|
322522737.540
|
261
|
||||
Profit after tax (Rs. In mill)
|
Between Groups
|
33479554.586
|
8
|
4184944.323
|
3.691
|
.000
|
Within Groups
|
286844889.336
|
253
|
1133774.266
|
|||
Total
|
320324443.921
|
261
|
||||
Hypothesis:
Sales:
Ho: μ2001= μ2002= μ2003= μ2004= μ2005= μ2006=
μ2007= μ2008= μ2009= μ2010
H1:
At least one mean is significantly different
Profit after tax:
Ho: μ2001= μ2002= μ2003= μ2004= μ2005= μ2006=
μ2007= μ2008= μ2009= μ2010
H1:
At least one mean is significantly different
Well
the p-value of Paid up capital is less than 0.05, so for this we will accept
the alternative hypothesis and reject the null hypothesis. Sales, Equity, No.
of share, Total assets, Profit before tax and Profit after tax have p-value
which is less than 0.05 from 2001 to 2010 same as for Paid up capital.
We
applied the (LSD) test for checking that which year’s mean is significantly
different from each other.
LSD
(I) Year
|
(J) Year
|
Mean Difference (I-J)
|
Std. Error
|
Sig.
|
|||
2001
|
2007
|
-210.728887*
|
75.522899
|
.006
|
|||
2008
|
-294.697714*
|
143.791315
|
.041
|
||||
2009
|
-407.675253*
|
77.869235
|
.000
|
||||
2010
|
-465.864754*
|
78.757747
|
.000
|
||||
2002
|
2007
|
-183.424547*
|
77.110339
|
.018
|
|||
2008
|
-267.393375
|
144.631389
|
.066
|
||||
2009
|
-380.370913*
|
79.409785
|
.000
|
||||
2010
|
-438.560415*
|
80.281249
|
.000
|
||||
2003
|
2007
|
-172.234839*
|
78.322775
|
.029
|
|||
2008
|
-256.203667
|
145.281421
|
.079
|
||||
2009
|
-369.181205*
|
80.587633
|
.000
|
||||
2010
|
-427.370707*
|
81.446495
|
.000
|
||||
2004
|
2009
|
-330.263020*
|
82.640144
|
.000
|
|||
2010
|
-388.452521*
|
83.477891
|
.000
|
||||
2005
|
2009
|
-341.761268*
|
76.966976
|
.000
|
|||
2010
|
-399.950770*
|
77.865785
|
.000
|
||||
2006
|
2009
|
-276.003151*
|
79.981877
|
.001
|
|||
2010
|
-334.192653*
|
80.847175
|
.000
|
||||
2007
|
2001
|
210.728887*
|
75.522899
|
.006
|
|||
2002
|
183.424547*
|
77.110339
|
.018
|
||||
2003
|
172.234839*
|
78.322775
|
.029
|
||||
2009
|
-196.946366*
|
81.230169
|
.016
|
||||
2010
|
-255.135868*
|
82.082309
|
.002
|
||||
2008
|
2001
|
294.697714*
|
143.791315
|
.041
|
|||
2009
|
2001
|
407.675253*
|
77.869235
|
.000
|
|||
2002
|
380.370913*
|
79.409785
|
.000
|
||||
2003
|
369.181205*
|
80.587633
|
.000
|
||||
2004
|
330.263020*
|
82.640144
|
.000
|
||||
2005
|
341.761268*
|
76.966976
|
.000
|
||||
2006
|
276.003151*
|
79.981877
|
.001
|
||||
2007
|
196.946366*
|
81.230169
|
.016
|
||||
2010
|
2001
|
465.864754*
|
78.757747
|
.000
|
|||
2002
|
438.560415*
|
80.281249
|
.000
|
||||
2003
|
427.370707*
|
81.446495
|
.000
|
||||
2004
|
388.452521*
|
83.477891
|
.000
|
||||
2005
|
399.950770*
|
77.865785
|
.000
|
||||
2006
|
334.192653*
|
80.847175
|
.000
|
||||
2007
|
255.135868*
|
82.082309
|
.002
|
||||
After applying LSD we
observed that the mean value of from year 2001 to 2010 is significantly
different.
Multiple
regression analysis has applied; in ANOVA table the p-value tells us that the
overall model is significant.
ANOVA
|
||||||
Model
|
Sum of Squares
|
df
|
Mean Square
|
F
|
Sig.
|
|
1
|
Regression
|
67603326.125
|
6
|
1.127E7
|
78.510
|
.000a
|
Residual
|
34873673.381
|
243
|
143513.059
|
|||
Total
|
102476999.507
|
249
|
||||
2
|
Regression
|
67482398.561
|
5
|
1.350E7
|
94.104
|
.000b
|
Residual
|
34994600.946
|
244
|
143420.496
|
|||
Total
|
102476999.507
|
249
|
||||
a. Predictors: (Constant), Sales (Mill) (Rs. In mill),
Banks/Financial charges (Rs. In mill), No. of share (Rs. In mill), Total
assets (Rs. In mill), Equity (Rs. In mill), Paid up capital (Rs. In mill).
|
||||||
b. Predictors: (Constant), Sales (Mill) (Rs. In mill),
Banks/Financial charges (Rs. In mill), No. of Share (Rs. In mill), Total
assets (Rs. In mill), Paid-up capital (Rs. In mill
|
||||||
c.
Dependent Variable: Profit after tax (Rs. In mill).
|
||||||
Model
|
Non-standardized Coefficients
|
Standardized Coefficients
|
t
|
Sig.
|
||
B
|
Std. Error
|
Beta
|
||||
1
|
(Constant)
|
6.293
|
30.954
|
.203
|
.839
|
|
Paid-up capital (Rs. In mill
|
-.780
|
.348
|
-.413
|
-2.242
|
.026
|
|
No. of Share (Rs. In mill)
|
5.898
|
3.315
|
.321
|
1.779
|
.076
|
|
Equity (Mill)(Rs. In mill)
|
-.031
|
.034
|
-.099
|
-.918
|
.360
|
|
Total assets (Rs. In mill)
|
-.037
|
.015
|
-.241
|
-2.463
|
.014
|
|
Banks/Financial charges (Rs. In mill)
|
18.860
|
2.506
|
.439
|
7.525
|
.000
|
|
Sales (Mill) (Rs. In mill)
|
.389
|
.029
|
.906
|
13.416
|
.000
|
|
2
|
(Constant)
|
11.597
|
30.400
|
.381
|
.703
|
|
Paid-up capital (Rs. In mill
|
-.771
|
.347
|
-.408
|
-2.218
|
.027
|
|
No. of Share (Rs. In mill)
|
5.573
|
3.295
|
.303
|
1.691
|
.092
|
|
Total assets (Rs. In mill)
|
-.045
|
.012
|
-.295
|
-3.760
|
.000
|
|
Banks/Financial charges (Rs. In mill)
|
17.219
|
1.756
|
.400
|
9.806
|
.000
|
|
Sales (Mill) (Rs. In mill)
|
.384
|
.028
|
.894
|
13.500
|
.000
|
|
a.
Dependent Variable: Profit after tax (Rs. In mill)
|
||||||
Profit after tax is
consider as depended variable and Paid up capital, Equity, Sales, Total Asset,
No. of Share and (Bank) / Financial charges are explanatory variables and by
the backward method we observed that Profit after tax is best described by Paid
up capital, Sales, Total assets, No. of share and (Bank) / Financial charges.
Model can be written
as:
PAT = β1 + β2 Paid up
capital + β3 No. of share + β4 Total assets + β5 Bank/Financial charges + β6
Sales
PAT = 11.597 + -0.771
Paid up capital + 5.573 No. of share + -0.45 Total assets + 17.219 Financial
charges + 0.384 Sales
Model
|
Non-standardized
Coefficients
|
Standardized Coefficients
|
t
|
Sig.
|
||
B
|
Std. Error
|
Beta
|
||||
1
|
(Constant)
|
81.182
|
68.177
|
1.191
|
.235
|
|
Paid-up capital (Rs. In mill
|
-.160
|
.768
|
-.036
|
-.208
|
.835
|
|
No. of Share (Rs. In mill)
|
.317
|
7.323
|
.007
|
.043
|
.965
|
|
Equity (Mill)(Rs. In mill)
|
.228
|
.074
|
.309
|
3.097
|
.002
|
|
Total assets (Rs. In mill)
|
.222
|
.030
|
.621
|
7.403
|
.000
|
|
Banks/Financial charges (Rs. In mill)
|
-13.066
|
5.473
|
-.130
|
-2.387
|
.018
|
|
2
|
(Constant)
|
81.859
|
66.231
|
1.236
|
.218
|
|
Paid-up capital (Rs. In mill
|
-.128
|
.230
|
-.029
|
-.558
|
.578
|
|
Equity (Mill)(Rs. In mill)
|
.229
|
.073
|
.310
|
3.127
|
.002
|
|
Total assets (Rs. In mill)
|
.222
|
.030
|
.621
|
7.445
|
.000
|
|
Banks/Financial charges (Rs. In mill)
|
-13.091
|
5.430
|
-.131
|
-2.411
|
.017
|
|
3
|
(Constant)
|
65.460
|
59.261
|
1.105
|
.270
|
|
Equity (Mill)(Rs. In mill)
|
.219
|
.071
|
.296
|
3.088
|
.002
|
|
Total assets (Rs. In mill)
|
.218
|
.029
|
.609
|
7.563
|
.000
|
|
Banks/Financial charges (Rs. In mill)
|
-12.090
|
5.117
|
-.121
|
-2.363
|
.019
|
|
We have depended
variable Sales and Paid up capital, Equity, No. of share, Total assets and Bank
/ Financial charges are consider as independent variables again backward method
is applied and it indicates that Equity , Total assets and Bank / Financial
charges is best describe in the total sales.
Model can be written
as:β
Sales = β1 + β2 Equity
+ β3 Total assets + β4 (Bank) / Financial charges
Sales = 65.460 + 0.219
Equity + 0.218 Total assets + (-12.090) Bank / Financial charges
Conclusion:
This study provides an
overview about financial changes in Insurance sector of Pakistan since
2001-2010. From results of this study we conclude that paid-up-capital
and no. of shares both were consistent in 2007, equity and total assets both
were consistent in 2004, sales showing consistency in year 2010, profit before
tax was consistence in 2004 while profit after tax is showing consistency in
2001.
On the
other hands by finding hypothesis of profit after tax, LSD tell us that that
(I)year 2003 and (J)year 2008 have significant value greater than 0.05, thus we
reject our null hypothesis(Ho:
μ2001= μ2002= μ2003= μ2004= μ2005= μ2006= μ2007= μ2008= μ2009= μ2010) and accept alternative hypothesis (H1: At least
one mean is significantly different).
References:
1.
Feldstein,
Paul J. and Wickizer, Thomas M. (1998), Analysis of Private Health Insurance
Premium Growth Rates: 1985-1992. Medical Care, Vol. 33, No. 10 (Oct., 1995),
pp. 1035-1050.
2.
Saied,
Khawaja Amjad (2007), a Review of Insurance Sector and HRM/HRD Aspects.
Website: www.kamjadsaeed.edu.pk
3.
Cull,
Robert . , Senbet, Lemma W. and
Sorge,Marco. (2005), Deposit Insurance
and Financial Development, Vol. 37, No. 1, pp. 43-82.
4.
Menon, Krishnagopal and Williams, David D. (1994),
The Insurance Hypothesis and Market Prices, Vol. 69, No. 2, pp. 327-342.
5.
Gruber , Jonathan . (2001), The Impact of the
Tax System on Health Insurance Coverage, Vol. 1, No. 3/4, pp. 293-304.
10. Herring , Bradley and Pauly, Mark V. (2001), Premium
Variation in the Individual Health Insurance Market, Vol. 1, No. 1, pp. 43-58
