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ility between assets and liabilities. Hence, total assets and total liabilities could be the variables to determine the growth opportunity of insurance industry.

 

In the research by Cummins and Phillips (2009) reported that the insurance industry in every developed country worldwide is seriously regulated, in which solvency level is the major regulation issue. A surge in insurer insolvencies that taken place in the late 1980s and early 1990s in the U.S., resulted from a liability crisis for property-liability insurers and asset quality troubles for life insurers, have driven the implementation of risk-based capital. The universal financial market turmoil associated financial crisis that began in 2008, influenced both equity and debt securities, had emphasized the necessity for regulators to revise their solvency surveillance schemes. The result of insolvency analysis demonstrates a general positive solvency experience in the U.S. life and property-casualty insurance industry. Predominantly during the most recent decade, the insolvency rates, numbers of insolvencies, and costs in terms of collateral funds evaluations have been quite low. Hence, the insurance industry generally exists to be cautiously supervised, and insurance ruling results to be efficient. However, improvement on some of the regulation areas should be done. Therefore, the U.S. system should thoroughly incorporate qualitative aspects, offer motivation for risk management improvement, and initiate an own-risk and solvency measurement practice.

 

Poposki (2007) studied that the dominance of financial synergies is the main intention for merger and acquisition activity in the insurance industry. It is known that the insurance industry has a high-cost distribution system and lack of price rivalry, however insurers are gradually encountered with more concentrated competition from non-traditional insurance suppliers such as mutual funds, investment firms and banks. The augmented competition has lessened profit margins and encouraged insurers to search for ideas to cut costs. Insurers have to become more inventive due to technological advances in sales, underwriting, pricing and policyholder services; and the comparatively huge fixed costs of the latest software may have exaggerated the lowest efficient level in the industry. These developments propose that financial synergies and possible competence gains may present a major enthusiasm for the current mergers and acquisitions in the insurance industry, improving the effectiveness of the firm’s goal 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 mult本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。