Study On Property Right Structure And Its Effectiveness Of Life Insurance Company In China

With the rapid growth of China’s insurance industry, the structure of property rights of life insurance company in China is also experiencing a series of dynamic evolution process. Joint-stock reform of state-owned life insurance companies; China Life and Ping An of China’s success Listing:the introduction of strategic investors in many life insurance companies; frequent change of the ownership structure of many life insurance companies and banks have shares of small and medium-sized life insurance companies, Chinese life insurance industry is undergoing a course of exclusive monopoly state-owned property changes as the coexistence of state-owned property including public property and private property rights. Life insurance company in China has already transformed from the past a single state-owned insurance companies dominate the world to the present dozens of stock insurance company. Not only organizational form evolved from the wholly state-owned insurance companies for the within-owned joint-stock companies and foreign joint-stock companies and joint ventures, equity structure has also undergone major changes, the nature of its shares changes from the state-owned shares to diversified ownership structure of the state-owned shares, foreign shares and private shares, the number of shareholders change from the state-owned structure to the pluralistic structure the state-owned holding.The diversified development of the property rights structure of the Chinese life insurance companies has make great contribution to improve the company’s governance structure and their operational efficiency, but the accompanying life insurance company operating a new problem."separation of two rights" of ownership and the actual control of the enterprise which happened in the joint-stock reform of state-owned life insurance company makes life insurance company must face the principal-agent problem produced by the information asymmetry between company owners and managers. In the process of introduction of strategic investors, the penetration of foreign capital on the Chinese life insurance companies and foreign capital itself the problems or acts of connected transactions may affect the holding of the domestic life insurance company’s solvency, and thus against the interests of the majority of the insured person’s. Private enterprises in their own immaturity in financial strength and business philosophy and underestimation of the life insurance industry profit cycle makes life insurance company frequently change the equity. Bank shares life insurance company maybe lead to the integration of corporate governance more difficult and affecting the life insurance company because of the increasing internal transmission of financial risk and non-standard behavior of connected transactions. Therefore, the property rights system reform of China’s life insurance companies can not only focus on the diversification of the form of property rights structure, but more importantly, how to make this diversity of property rights structure for the Chinese life insurance companies to bring greater efficiency, which is the issue of the effectiveness of property rights structure of life insurance companies. This is the pressing issues facing the life insurance companies.In recent years, analyzed the need for reform of property rights structure of insurance companies and the specific measures of property rights structural reform from the qualitative point of view more, in particular, more research on the problems of Chinese insurance companies in the state-controlled ownership structure dominated and the resulting governance problems. Specifically for the effectiveness of the property rights structure of the life insurance companies, the research literature is very small. Therefore it is necessary to discuss the effectiveness of the property rights structure of the life insurance companies from a quantitative point of view. It is also necessary to analyze and inspect with empirical method what the diversification of ownership structure and manager’s incentive caused by the property structural reform of life insurance company in China impact on the life insurance company’s profit efficiency and cost efficiency and the extent of impact, and provide theoretical support for the Chinese life insurance companies to take various measures to improve operating efficiency in practice. In this paper, whether the ownership structure of the life insurance companies for the main body of the company at its disposal to provide externalities more to internalize the incentive as a measure of the effectiveness of the property rights structure of life insurance companies. With this as the core, on the one hand, starting from the "two rights structure" of nominal property rights and real property rights of capital in life insurance company, the paper leads to the incentives of two levels of internalize externalities of life insurance companies, that is, nominal property right incentives and the actual property right incentives. Through the analysis of the relationship between ownership structure and the efficiency of life insurance companies and the relationship between manager incentives and the efficiency of life insurance companies, it systematically elaborated the efficiency of property rights structure of the life insurance companies in order to establish the framework of basic theory of the effectiveness of the property rights structure of life insurance companies. On the other hand, after analysis of the development of the property rights structure of Chinese life insurance companies, the paper uses stochastic frontier approach (SFA) to build stochastic frontier profit efficiency and cost efficiency model of Chinese life insurance companies, and studies on the impact of ownership structure and manager remuneration on Chinese life insurance companies profit efficiency and cost efficiency to test the effectiveness of the property rights structure of Chinese life insurance companies, and eventually proposes suggests and recommendations to improve the effectiveness of the property rights structure of Chinese life insurance company.This dissertation is composed by eight parts. Chapter Ⅰ servers as an introduction which is concerned with such areas as the aim and significance of this dissertation, literature review, analytical framework, methodology, as well as contribution and deficiency. Chapter Ⅱ is the basic theory of the property rights structure and its effectiveness of life insurance companies. Reviewing the related concepts and theories of property rights, transaction costs, incentives and efficiency, this part gives attention to the definition of property rights structure and its effectiveness. Chapter Ⅲ is the general analysis of the effectiveness of property rights structure of life insurance companies. This part consists of its theoretical framework and core elements of property rights structure of life insurance companies. Chapter Ⅳ is the analysis of the history, status quo and the main features of the reform of Chinese life insurance company property rights structural and manager incentives, including the reform of property rights structure of China Life Insurance Co., Ltd and the comparation of managers remuneration incentives of China Life, Ping An and China Pacific as a case. Chapter Vis its international comparison. This part laterally compares the changes of the property rights structure of life insurance companies and analyzes the ownership structure and manager incentives of some life insurance companies in US, Japan, UK and Taiwan, and also summarizes its characteristics, in order to provide useful experience for us. Chapter Ⅵ is the analysis of the effectiveness of ownership structure of Chinese life insurance company. This part builds the empirical model of Chinese life insurance company profits and cost efficiency using the beyond logarithm cost function and combining with Battese&Coelli (1995) model, and estimates the profit and cost efficiency of companies in different period, and analyzes the influence of equity structure on China life insurance companies’ profits and cost efficiency. Chapter W is the analysis of the effectiveness of manager incentives of Chinese life insurance company. This part builds the empirical model of China’s listed insurance company profits efficiency and cost efficiency using the Cobb-Douglas cost function, and analyzes the influence of manager compensation on Chinese life insurance companies’profits and cost efficiency. Chapter Ⅷ is the proposals of improve the effectiveness of life insurance companies property rights structure in China. Based on these theoretical and empirical results, this part elaborated the specific measures to enhance the efficiency of ownership structure and managers incentives of life insurance company in China.The contributions of this dissertation may include the following aspects:Firstly, the dissertation initially builts the framework of the effectiveness of the structure of property rights of life insurance companies. The literature about life insurance companies operating efficiency from the perspective of the property rights structure can be described as scarce.Secondly, this paper uses whether the ownership structure of the life insurance companies for the main body of the company at its disposal to provide externalities more to internalize the incentive as a measure of the effectiveness of life insurance companies property rights structure, and uses the relationship between the efficiency of life insurance companies and its ownership structure and manager incentives as specific performance, and systematically demonstrates the theory of effectiveness of life insurance companies property rights structure from both theoretical and empirical.Thirdly, the dissertation uses Battese&Coelli (1995) model of the stochastic frontier efficiency analysis (SFA) build the stochastic frontier pro fit-efficiency and cost-efficiency model of Chinese life insurance company and the stochastic frontier profit-efficiency and cost-efficiency model of Chinese listed insurance companies. Based on the above two models, the paper analyzes the impact of the ownership structure on Chinese life insurance companies profit-efficiency and cost-efficient and the managerial compensation on Chinese listed insurance companies profit-efficiency and cost-efficient.Finally, the dissertation summarizes the characteristics of the ownership structure and manager remuneration incentives in the2010Annual Report of some life insurance companies in developed countries and regions, and has a strong actual reference for the reform of property rights structure of life insurance companies in China.