Insurance Funds Investment and Corporate Governance
Date Issued
2006
Date
2006
Author(s)
Chen, Wei-Lung
DOI
zh-TW
Abstract
Insurance funds includes policyholders’ surplus and statutory reserves; so far there are no regulations for separated funds investment or independent accounting as such. Fundamentally, insurance policyholders have rights to the reserves and stockholders have rights to the policyholders’ surplus. Under the system of corporation law, only stockholders can be involved in the corporate management; and most of the operational goals have been emphasizing stockholders’ value. On the other hand, policyholders’ benefits tend to be overlooked, and even abused. Related issues have been widely discussed, whether the policyholders’ rights should be placed in the higher priority or the stockholders’ value should be the main objective when making the funds investment plan. In 2003, China Life used the insurance funds to purchase the stock of China Development Financial Holding Corp.; and subsequently obtained the directorship in the Board of Directors. There are many disputes on: whether the insurance funds could be used in M&A (Merger and Acquisition) actions; and if imposing strict rules, would it lower the firm value and the incentive of M&A activities in the industry. In addition, the high financial leverage in the insurance industry should be well-controlled by the company. Hence it is imperative to form a prudent environment to regulate and supervise these activities.
This research has gathered regulations regarding insurance companies involve in corporate management in many jurisdictions such as the USA, Japan, and UK..With various comparisons from different aspects; it is expected to reveal the insufficiency in the current regulations in Taiwan. Moreover, the conflict of interests between stockholders and policyholders; together with the information asymmetry it created the “agency problem”. The insurance industry should strengthen corporate governance system, and establish an “Asset and Liability Management Committee” to enhance the efficiency of insurance funds investment .
To support the arguments in this research, related academic studies, research papers, news articles, and magazines are used and referenced. The short-term objective is to amend Insurance Law ; and for the long run, it is expected to establish a sound corporate governance system and create an environment which the investment of insurance funds is transparent, reasonable and efficient.
Subjects
保險業資金運用
保險業參與公司經營
保險經營
責任準備金
關係人交易
公司治理
代理問題
股東行動主義
Insurance funds investment
Insurance enterprise participating in other corporate management
Insurance business management
Reserves (Reserve funds)
Corporate governance
Agency problem
Asset and Liability Management Committee
Shareholder Activism.
Type
other
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