Financial Performance Of Insurance Industry Economics Essay

Everybody is rendered to all types of unanticipated risks in the daily life. These risks may arise to ones life, property or even business enterprise. Often, these risks are so devastating and destroying that influence the lives of many individuals in the world, which it may leave these unlucky people susceptible and helpless. The question that rises, in what way can we help those unfortunate people? To answer this question, the recommendation would be through the application of insurance. The main intention of insurance is to uphold, among the parties involved, shared responsibilities on the basis of mutual co-operation in protecting an individual against unpredicted risks.

In the point of economics perspective, insurance facilitate industrialists and other entrepreneurs to avoid the necessity of freezing capital to guard against various contingencies due to the reason they can reimburse a fixed contribution which is called premium and obtain financial security against the risks insured. Insurance has also permitted commercial, industrial and huge of other organizations to operate on a large scale which otherwise would have been unattainable. Enormous insurance funds are also invested in Government securities and industrial shares that ultimately offer financial support to the government, local authorities and industry.

The insurance sector has an important role in the economic development of a country, mainly by its role of intermediary and provider of financial services and by identifying the risk transfer of the society. (Ionescu, 2012)

Background of Study

Insurance as a tool for risk management has been the topic of a large body of educational literature in the last twenty years. In Malaysia, the government delegated Bank Negara Malaysia with the regulatory and supervisory role over the insurance industries. Bank Negara Malaysia plays its role as overseer in ensuring the safety, reliability, and efficiency of payment systems infrastructure, and to safeguard the public’s interest.

The initial remarks of insurance in Malaysia dates back to the 18th centuries where trading firms and agency houses acted as agents for insurance companies from the United Kingdom. The Government subsequently intervened and the Insurance Act, 1963 was introduced and then it was replaced by the Insurance Act 1996. It is an Act to provide new laws for the licensing and regulation of insurance business, insurance broking business, adjusting business and financial advisory business and for other related purposes.

Alias, Hussein and Mohammad (2012) reported that Malaysia’s insurance industry is one of the key drivers of the services sector. A general breakdown indicates that the country’s finance and insurance industry accounted for 20.1% of the services sector’s output in 2011 (2000: 18.6%) as well as 11.8% of the country’s gross domestic product or GDP (2000: 9.2%). The services sector as a whole accounted for a hefty 58.6% of GDP and is expected to remain a major contributor to economic growth in the years to come. This has proven that insurance industry in Malaysia still remain as a key contributor to economic growth.

Generally, there are three types of insurance business popular in Malaysia which are general insurance, takaful insurance and life insurance.

General or conventional insurance is a contract in which one person (the insurer) undertakes in return for the agreed consideration (premium) to pay to another person (the insured), a sum of money (the indemnity) on the happening of a specified event (Dorfman, 2003). The examples of general insurance policies reported in Bank Negara Malaysia are Marine, Aviation and Transit, Contractors’ All Risks and Engineering, Fire, Medical Expenses and Personal Accident, Motor, Liability, Workmen’s Compensation and Employers’ Liability and miscellaneous.

Takaful insurance is developed on three principles: 1) Mutual responsibility 2) Co-operation with each other 3) Protecting one another from any kind of difficulties, disasters and other misfortune whereby the financial contribution (premium) is based on the concept of tabarru’ (Osman, 2003). Tabarru’ is derived from the Arabic noun that means donation, gift and contribution (Mohd, 1999). Takaful and general insurance have similar characteristics, for instance, in terms of the nature of their businesses, products and services offered. The only dissimilarity is that takaful is based on the Shariah law, while general insurance is not.

Life insurance means a policy by which payment of policy moneys is insured on death or survival, including extensions of cover for personal accident, disease or sickness and includes an annuity but does not include a personal accident policy. (Insurance Act 1996)

According to the Bank Negara Malaysia Insurance Key Indicator 2011, there are 22 licensed general insurance companies, 9 licensed life insurance companies, 6 licensed life and general insurance companies as at year 2011. Besides, there are 11 licensed takaful insurance companies as reported by Bank Negara Malaysia Takaful Key Indicator 2011.

1.1.1 Background of Study on the Sample Data

Allianz Malaysia Berhad

Allianz officially stepped foot in Malaysia in 2001 when it became the controlling shareholder of Allianz General Insurance Malaysia Berhad (“AGIM”). In 2007, the general insurance business of AGIM was transferred to its wholly-owned subsidiary, AGIC. Following the completion of the transfer of general insurance business, AGIM changed its name to AMB and became an investment holding company, with a general insurance (AGIC) and life insurance (ALIM) subsidiary. AGIC is one the leading general insurer in Malaysia and has a broad spectrum of services in personal lines; small to medium enterprise business and large industrial risks. AGIC also leverages on the banc assurance agreement with CIMB Bank to reach out to the bank’s over-a-million-customer base. The GWP for general insurance business for financial year 2011 reached a mark of RM 1.46 billion. ALIM offers a comprehensive range of life and health insurance and investment-linked products and for the financial year 2011, ALIM recorded a gross written premium (“GWP”) of RM 1.14 billion and is one of the fastest growing life insurers in Malaysia. (Allianze Profile, 2012)

KSK Group Berhad

The combined business of Kurnia and AmGeneral has recently emerged as Malaysia’s leading general insurer and a clear market leader in motor insurance. Serving more than 4 million customers, it offers extensive general insurance products and services, ranging from motor to commercial and personal lines insurance plans, under our well-known Kurnia and AmAssurance brands. Underwriting around RM1.7 billion of insurance premiums each year, their distribution channels include 7,000 plus agents, supported by our extensive national branch network, as well as 191 AmBank branches across the country.

LPI Capital Berhad

LPI Capital Bhd (LPI), formerly known as London & Pacific Insurance Company Berhad, is an investment holding company. After a rationalisation scheme, LPI transferred its entire insurance business to its wholly-owned subsidiary Lonpac Insurance Bhd on 1 May 1999 and at the same time changed its name from London & Pacific Insurance Company Berhad to LPI Capital Bhd. The Company was incorporated on 24 May 1962 as a private limited company and was registered as an approved insurer on 9 April 1963 under the Malaysian Insurance Act, 1963. The shares of LPI were also listed on the Second Board of the Kuala Lumpur Stock Exchange (KLSE) on 8 January 1993 and were subsequently transferred to the Main Board of the KLSE (now known as Main Market of Bursa Malaysia Securities Berhad) on 17 January 1997. The adjusted paid-up capital of the Company is RM220,309,380 comprising of 220,309,380 ordinary shares of RM1.00 each (excluding Treasury Shares of RM1,014,600 comprising of 1,014,600 ordinary shares of RM1.00 each).

Lonpac Insurance Bhd (Lonpac), a wholly owned subsidiary of LPI Capital Bhd, was incorporated in Malaysia on 12 July 1994. It commenced underwriting of general insurance business after a rationalisation scheme on 1 May 1999. The paid-up capital of the Company is RM200,000,000 comprising of 200,000,000 ordinary shares of RM1.00 each. The Company operates through 21 branches in Malaysia and a foreign branch in Singapore to serve the clients better. In September 2005, the Malaysian Rating Corporation Berhad (MARC) has reaffirmed the general insurance strength rating of Lonpac at “AA”, reconfirming its financial stability and reliability in the insurance industry. In September 2011, the A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating (ICR) of “a-” to Lonpac. The ratings recognised Lonpac’s ability to gain market share while maintaining a favourable underwriting performance, regardless of the competitive operating environment in its core markets, namely Malaysia and Singapore.

MAA Group Berhad

As of 1 October 2011, Malaysian Assurance Alliance Berhad entered a new era, after it was acquired by Zurich Insurance Group. Zurich Insurance Malaysia has a well established presence in Malaysia with 39 branches nationwide, with powerful distribution forces of more than 4,600 Life Insurance agents and more than 3,000 General Insurance agents; a strong management team and committed and experienced employees. Zurich Insurance Malaysia, headquartered in Kuala Lumpur, provides Life and General Insurance as well as Healthcare and Personal Accident Insurance. The Life business includes Investment-Linked plans, Single Premium plans, Individual Life insurance and Group Life Insurance. Their General Insurance products include Property Insurance, Pecuniary, Motor Insurance, Engineering, Surety & Guarantee, Marine Insurance, Financial Lines, Liability and Foreign Workers Schemes. Our Accident and Health products include Healthcare and Personal Accident. On 20 December 2011, the Company increased its authorised share capital from RM500,000,000 to RM750,000,000 with the creation of 250,000,000 new ordinary shares of RM1.00 each. On 22 December 2011, the Company issued 429,000,000 ordinary shares for cash at par to meet the minimum capital adequacy ratio specified by Bank Negara Malaysia.

Manulife Malaysia

Manulife Malaysia was first established in 1963 as a branch of Bahamas-based British American Insurance Co. It became a public limited company in 1981 and changed its name to British American (Malaysia) Insurance Berhad. In 1994, the company was renamed John Hancock Life Insurance (Berhad) to reflect our association with John Hancock Mutual Life Insurance Company in USA. Later, the Company changed its name to Manulife Insurance (Malaysia) Berhad following the large-scale global merger between Canadian-based Manulife Financial Corporation and US based John Hancock Financial Services, Inc in 2004. Effective 1st October 2008, Manulife Insurance (Malaysia) Berhad became Manulife Holdings Berhad. Manulife Malaysia is a progressive company, not just in the products and services they offered but also in the way they do business. Subsidiaries companies under Manulife Holdings Berhad are Manulife Insurance Berhad and Manulife Asset Management Services Berhad (formerly known as Manulife Unit Trusts Berhad). Manulife Holdings Berhad is listed on the Bursa Malaysia. Share capital of the company as at 2011 is RM101,185 million.

MNRB Holdinggs Berhad

In early 1965, the Malaysian Government conceived the idea of forming a national reinsurance company in order to curtail the ever increasing outflow of reinsurance premium overseas. A feasibility study on the formation of such a company was done in 1971 and on 30 December 1972, Malaysian National Reinsurance Berhad was incorporated under the Companies Act, 1965. It commenced operations on 19 February 1973. Effective 1 April 2005, as part of the restructuring exercise of MNRB Group, the reinsurance business, reinsurance licence and reinsurance assets, up to a net amount of RM400 million, were transferred from Malaysian National Reinsurance Berhad to Malaysian Reinsurance Berhad (Malaysian Re). Pursuant to the restructuring, Malaysian National Reinsurance Berhad became an investment holding company and was renamed as MNRB Holdings Berhad. On 20 November 1996, MNRB was listed on Bursa Malaysia Securities Berhad. It has authorised Capital of RM500 million, divided into 500 million ordinary shares of RM 1.00 each. The Company’s initial Paid-Up Capital in 1973 was RM2,000,002 and has increased progressively to RM213,069,500 as at 31 March 2010.

Pacific & Orient Berhad

Pacific & Orient started as a private limited company in 1994. It acquired Pacific & Orient Insurance (P&O Insurance), one of the largest Malaysian general insurers, and then went on to be listed on the Main Board of the Bursa Malaysia Securities Berhad in 1995. Since then, Pacific & Orient Berhad has diversified in business interests to include financial services and information technology services. These businesses have a common pool of human and information resources, which the Group can capitalise on in its search for new business and investment opportunities.

Syarikat Takaful Malaysia Berhad

Syarikat Takaful Malaysia Berhad (Takaful Malaysia) was incorporated on the 29th of November 1984. Takaful Malaysia was transformed into a public limited company on the 30th of July 1996 followed with the listing of its shares on the Main Board (now known as ‘Main Market’) of Bursa Malaysia Securities Berhad. The capital was then raised to RM55 million. The capital structure since then has been further enhanced arising out of the restructuring exercise at the end of 2003, resulted in the paid-up share capital of Takaful Malaysia currently stands at RM162.817 million.

BIMB Holdings Berhad is the major shareholder with 61.81% stake in Takaful Malaysia. Under BIMB Holdings Berhad Group, Bank Islam Malaysia Berhad (BIMB), the first Islamic bank of Malaysia is a 51.00% owned subsidiary of BIMB Holdings Berhad. Apart from banking and takaful, BIMB Holdings Group has interests in stock broking, venture capital, unit trusts and off-shore banking. In a way, the BIMB Holdings Group has been the catalyst in actively developing not only Islamic banking and takaful but also Islamic capital market. On 1st of July 2009, BIMB Holdings Berhad became a subsidiary of Lembaga Tabung Haji after increasing its shareholding in BIMB Holdings Berhad to 51.47%.

Problem Statement

Over the past twenty years, the insurance industry in Malaysia has proven progressive expansion.

The general insurance industry registered positive growth in 2011 amidst global economic uncertainty and huge catastrophic losses experienced in the region. Gross written premium showed a growth of 7.85% to reach RM14.029 billion, compared with an increase of 8.56% (RM13.009 billion) in 2010. Net premiums grew at a rate of 8.20% to reach RM9.718 billion. (PIAM Annual Report, 2012)

Public demand for takaful products has constantly climbed, as the evident from the improvement in contributions (premiums) of takaful. For example, total net contributions for takaful increased by a growth rate at an average of 19.44% annually from 2007 to 2011, to register RM1158.9 million in 2011 (Bank Negara Malaysia, 2011). An appealing truth is that, Malaysia’s takaful industry still has plenty of room for growth due to several factors including a low penetration rate despite a pre-dominant Muslim population. Syarikat Takaful Malaysia Bhd group managing director Datuk Mohamed Hassan Kamil foresee that insurance and takaful industries growing strongly both on the international and domestic front. (Nayagam, 2012)

The life insurance industry in Malaysia is expected to see a 10% growth in premiums 2012, based on the regional economic growth, said Bank Negara Malaysia assistant governor Donald Joshua Jaganathan. Besides, a spokesman for the Life Insurance Association of Malaysia (LIAM) said Malaysia’s life insurance business is expected to grow by 9% to 10% in the year 2013 on strong demand from the middle class coupled with brisk economic growth due to the growth would be helped by fresh graduates buying insurance for saving and protection purposes. (The Star Online, 2012)

The above statements have shown that there are growth opportunities for insurance industry in Malaysia in the future. However, there is yet any study research have done on the performance of insurance industry in Malaysia to indicate how well has the insurance industry operated in Malaysia. There is also lack of research on the factors that affect the growth opportunity of insurance industry in Malaysia.

In relation to this, this study is to provide empirical evidence on the financial performance of insurance industry in Malaysia. It is hope that this study will provide adequate answer to the public whether the insurance industry is profitable in Malaysia and whether there is still growth opportunity for the insurance industry.

1.3 Research Question

This study will seek to answer the following research questions:

Do the insurance -based companies in Malaysia have a good financial performance?

Is there an expansion opportunity of insurance-based companies in Malaysia?

1.4 Research Objective

The general objective of this study is to investigate is there expansion opportunities of insurance industry in Malaysia.

Besides, this research also tends to analyse the financial performance of selected sample of insurance-based companies in Malaysia by analyzing their returns, comparing the financial health of the selected sample using common size financial statement analysis and financial ratio analysis.

1.5 Significant of Study

This study intends to present evidence to interested parties as to whether the insurance is profitable by looking at its performance over the past five years. Moreover, this study also provides confirmation whether there is growth opportunity for insurance companies.

CHAPTER 2:

2.0 LITERATURE REVIEW

2.1 Literature Review on Insurance Industry

The findings reported by Outreville (1990), the importance of the relationship between financial development and economic growth should be recognized. It suggested that the developing countries have a supply-leading causality pattern of development, hence more attention should be paid to supply forces in insurance markets. Property-Liability insurance like other financial services has grown in quantitative importance as part of the general development of financial institutions. It found out that economic importance of the insurance sector is still low when considering the share of total premiums generated in developing countries. However, it concluded that he development of property-liability insurance demand in developing countries depend on the level of the gross domestic product and the level of financial development. But at the same time, the external debt situation of the developing countries is likely to slow the pace of growth.

Research by Ionescu (2012) found out that in a modern economy, insurances play an important role by promoting effective control of various risk categories and mobilizing people’s savings in order to bring its contribution towards financial stability. The study shows that the Romanian market is strongly under-insured due to a small amount of premiums and very low advance compared to the mature European. The reasons are largely related to insufficient tax incentives, lack of financial resources, understanding the need for insurance, the impact of the economic crisis, the high debt rate accumulated by the population years before the crisis, reduced credit, lower income levels and uncertainty about financial security and losses from insurance products that have an investment component. The low level of protection in Roman provides the biggest opportunity of the local insurance industry. Therefore, the professionalism of the insurance industry should be intensified, given the asymmetry between the consumers’ knowledge on the products and services.

Hamid, Osman and Nordin (2009) had investigated the factors such as leverage, growth opportunities, expected bankruptcy costs, company size, managerial ownership, tax considerations, and regulated effects are the determinants of corporate demand for takaful in Malaysia. However, there was insignificant result in growth opportunities of the corporations and the corporate decision on property takaful put a sign that takaful operators may wish to make better reflect of risk management needs of enterprises in their product innovation and market strategies.

Dynamic Financial Analysis (DFA) is an approach that reflects the uncertainty involved in modeling an insurance company. Stochastic variables are used to symbolize factors that will influence the company’s operations. This approach leads to a range of possible outcomes, along with their associated probabilities, rather than simply a single best estimate of the outcome. DFA can be a very functional tool for both solvency testing and strategic planning. However, it is not the ultimate solution to all the problems of operating, or regulating, an insurance company due to the strategies that appear best based on DFA models will help an insurer, but not guarantee long-term success. With the application of mathematical modeling and accurate projection, DFA allows insurers to position themselves to better take advantage of opportunities and avoid potential problems. Nevertheless, it is expected that additional risks and developments beyond the ability of the model to quantify could be occur. DFA can be a significant help in managing an insurance company, but it will not provide managers with answers to all the problems that face the insurance industry due to insurance is too complex to be modeled completely. (D’Arcy and Gorvett)

Cummins (2000) said that capital allocation is of special attention to financial firms such as insurers. For such firms, the principal providers of debt capital (insurance reserves) are also the firm’s principal customers. Unlike the holders of bonds and other (non-insurance) debt capital, insurance policyholders cannot protect themselves against the insolvency of specific debt issuers by holding a diversified portfolio. Unlike the diversified bond investor, the typical policyholder relies upon one insurer for each type of protection purchased. Most insurance policies are purchased not as an investment but to protect against adverse financial contingencies. Thus, insolvency risk plays a special role in the insurance industry, and capital is held to assure policyholders that claims will be paid even if larger than expected. It is also claimed that, capital allocation must consider both asset and liability risk and allow for covariability between assets and liabilities.

In the research by Cummins and Phillips (2009) reported that the insurance industry is heavily regulated in every developed economy worldwide, with regulation focusing primarily on solvency. In the U.S., the adoption of risk-based capital was driven by a surge in insurer insolvencies that occurred in the late 1980s and early 1990s, arising from a liability crisis for property-liability insurers and asset quality problems for life insurers. The financial crisis that began in 2008 and the accompanying general financial market turmoil, affecting both debt and equity securities, reinforced the need for regulators to revise their solvency surveillance systems. The result of insolvency review shows generally favorable solvency experience in the U.S. life and property-casualty insurance industries. The insolvency rates, numbers of insolvencies, and costs in terms of guaranty funds assessments have been quite low, particularly during the most recent decade. Thus, the insurance industry generally appears to be prudently managed, and insurance regulation appears to be effective. Nevertheless, there are areas where regulation could be improved. The U.S. system ignores important risks such as operational risk and catastrophe risk and overlooks important qualitative criteria such as risk management systems and corporate governance. Hence, the U.S. system needs to systematically incorporate qualitative factors, provide incentives for improved risk management, and introduce an own-risk and solvency assessment process.

Poposki (2007) studied that the prevalence of financial synergies is the main motive for merger and acquisition activity in the insurance industry. The insurance industry has been known for its high-cost distribution system and lack of price competition, but insurers are increasingly faced with more intensive competition from non-traditional sources such as banks, mutual funds, and investment firms. The increased competition has narrowed profit margins and motivated insurers to seek ways to reduce costs. Technological advances in sales, pricing, underwriting, and policyholder services have forced insurers to become more innovative; and the relatively high fixed costs of the new systems may have affected the minimum efficient scale in the industry. These developments suggest that financial synergies and potential efficiency gains may provide a major motivation for the recent mergers and acquisitions in the insurance industry, enhancing the efficiency of the target firm and/or the combined post-merger entity.

2.2 Literature Review on Financial Analysis

Whittington (1980) identified two principle uses of financial ratios. The traditional, normative use of the measurement of a firm’s ratio compared with a standard, and the positive use in estimating empirical relationship, usually for predictive purpose. The positive use of financial ratios has been of two types by accountants and analysts to forecast future financial variables, for example, estimated future profit by multiplying predicted sales by the profit margin (the profit/sales margin), and, more recently by researchers in statistical models for mainly predictive purpose such as corporate failure, credit rating, the assessment of risk, and the testing of economic hypotheses in which the inputs are financial ratios.

` Pretty, Keon, Scoot and Martin suggest that financial analysis particularly ratio, is an important tool for determining how a business perform. Financial analysis is the assessment of a firm’s past, present, and anticipated future financial condition. Its objectives are to determine the firm’s financial strength and weaknesses. Financial ratios give analyst a way of making meaningful comparison of a firm’s financial data at different point of time and with other firms against a standard. Financial ratios provide the basis for answering some very important question concerning the financial well being of the firms.

Financial intermediaries, and particularly banks, have a very important role in financial markets since they are well suited to engage in information-producing activities that facilitate productive investment for the economy. Thus, a decision is as ability of these institutions to engage in financial intermediaries and to make loans which will lead directly to a decline in investment and aggregate economy activity. When stocks to the financial system make adverse selection and moral hazard problem worse, then lending tends to dry up, even for many of those with productive investments opportunities, since it has become harder to distinguish them from potential borrowers who do not have good opportunities. The lack of credit leads individuals and firms to cut their spending, resulting in a contraction of economic activity that can be quite severe (Jang and Chul, 1999).

CHAPTER 3:

3.0 Data and Methodology

The first part of this study attempts to evaluate the performance of the sample of 8 insurance-based companies by analyzing the financial statement for five years period, for the year ended 2007 until 2011. These 8 companies are chosen because their core business is insurance business and they are public listed company, so that the data could be easily obtained. The performance will be evaluated in forms of ratio analysis such as liquidity ratios, activity ratios, leverage and solvency ratios, profitability ratios and market ratios. According to Lev and Sunder (1979), there are two principle reasons for using ratios which are to control for the effect of size on the financial variables being estimated and to control for industry-wide factors. The data obtained for this part are from the financial statements of the sample companies as well as from the annual report provided by Bursa Malaysia. The financial analysis covers the following:

Common size financial statement analysis

Common size financial statement reports financial disclosure as a percentage of another account or as proportion of their previous balance. In common size balance sheet, each asset, liability, and owners equity amount is expressed as a percentage of sales.

Financial ratio analysis

In addressing the issue of comparing the firm’s performance with that of other firms in the same industry, a number of ratios such as liquidity ratio, asset management ratio, debt management ratio, profitability ratio and market value ratio were computed. The formulas used in the computation are as below.

Ratio

Formula

1

Liquidity Ratio – To measure the company’s ability to meet short term obligation using current assets.

Current Ratio

Current Asset / Current Liabilities

Quick Ratio (Acid Test)

(Current Assets – Inventory) / Current Liabilities

2

Activity Ratio – To indicate how effectively the firm’s resources are being utilized.

Fixed Assets Turnover

Sales / Net Fixed Assets

Total Assets Turnover

Sales / Total Assets

3

Leverage and Solvency Ratio – To reflect to what extend the firm has been finance by the debt

Total Debts to Total Assets

Total Debts / Total Assets

4

Profitability Ratio – To measure the management’s capacity to generate profits on sales and total investment in the business.

Return in Total Assets

Net Income / Total Assets

Profit Margin in Sales

Net Income / Sales

Basic Earning Power

Earnings before Interest and Tax / Total Assets

5

Market Value Ratio – To provide an indication to stockholders and potential investors to decide on investment in the company.

Price to Earnings

Price per Share / Earning per Share

Market to Book

Price per Share / Book Value per Share

The second part of this study is trying to investigate whether there is growth opportunity in Malaysia insurance industry. The data are obtained through Bank Negara Malaysia website. The data used are the sample of 8 insurance-based companies for five years period, for the year ended 2007 until 2011.

The dependant variable is growth opportunity of insurance company, the Market to Book Value Ratio is used as the proxy for growth opportunity. The factors that will influence the growth opportunity of the insurance company are the independent variables. The factors are earned premium income, net investment income, net claims incurred, commissions paid, total assets and total liabilities.

The hypothesis developments are as below:

H1: The more earned premium income will enhance the opportunity of insurance company to grow. Hence, earned premium income is expected to be positively related with grow opportunity.

H2: The higher the net investment income, the insurance company tends to grow. Thus, net investment income is expected to be positively related with grow opport