Contentss
Chapter 4 Data and Methodology
4.0 Introduction
4.1 Datas
4.1.1 Data Collection and Types of Data
4.1.2 Datas beginnings
4.1.3 Sample Size
4.2. Variables
4.2.1 Conventional Performance
4.2.2 Stock Performance
4.3 Model
4.3.1 Advantages of the ARDL Model
4.3.2 Trials to be used
4.4 Constraints
4.5 Drumhead
Chapter 4 Data and Methodology
4.0 Introduction
This paper traces the public presentation of the insurance companies quoted on the Stock Exchange of Mauritius viz. , Mauritius Union Assurance Co. Ltd, Swan Insurance Co. Ltd, Mauritian Eagle Insurance Co. Ltd and Anglo Mauritius Assurance Society Ltd. There is barely any related research on this subject and it is of import hence to understand the deduction and development of the insurance companies in Mauritius. The Merriam-Webster Collegiate Dictionary ( 11Thursdayedition ) , defines research as “investigation or experimentation aimed at the find and reading of facts, alteration of recognized theories or Torahs in the visible radiation of new facts, or practical application of such new or revised theories or laws” , which is in fact attempted throughout this thesis.
4.1 Datas
4.1.1 Data Collection and Types of Data
Data aggregation is an of import component of research identified by Federer ( 1972 ) as a agency of presenting computations, to demo mistakes, variableness and inaccuracy every bit good as to hold a set of informations to explicate methodological analysis. Data takes up the signifier of primary and secondary informations. For the intent of this survey, secondary informations, such as fiscal informations reported by the insurance companies has been used.
4.1.2 Datas beginnings
The survey carried out was based on quantitative every bit good as qualitative informations about the insurance companies. Datas used for this purpose semen from assorted beginnings. Qualitative information collected was chiefly from academic diaries. Quantitative informations such as one-year studies were obtained from the different insurance companies mentioned supra, the registrar of companies, the stock exchange of Mauritius and statistical bulletins from the FSC web site.
- Annual Reports
Section 210 of the Companies Act 2001 requires every company to fix fiscal statements. They should conform to the International Accounting Standards ( IAS ) as per subdivision 211 ( 1 ) ( a ) of the act.
The SEM is a member of the World Federation of Exchanges ( WFE ) , antecedently known as the “Federation Internationale des Bourses de Valeurs” , since November 2005. It is required hence to move in conformity with the criterions and market rules set up by the WFE. As such, it is a requirement for companies listed on the SEM to follow with the listing regulations. Consequently, insurance companies listed on the official market under Banks & A ; Insurance and other Finance, such as Mauritius Union Assurance Co. Ltd [ 1 ] , Swan Insurance Co. Ltd and Mauritian Eagle Insurance Co. Ltd, should print and subject their one-year studies within specified clip periods.
A recent mission of the SEM was the formation of the Development & A ; Enterprise Market ( DEM ) . The DEM was created non merely for companies on the OTC market but besides for Small and Medium-sized Enterprises ( SMEs ) such as the Anglo Mauritius Assurance Society Ltd. As the latter is listed on the DEM under Banks & A ; Insurance and other Finance, its one-year studies should conform to the IFRS and audited in conformity with the ISA.
Annual studies were obtained from these insurance companies. Recent 1s can be consulted on their web sites while past fiscal statements were provided as hardcopies. Datas obtained for Swan Insurance Co. Ltd covers the old ages 1955 to 2012, for Mauritanian Eagle Insurance Co. Ltd, 1978 to 2012 while for Anglo Mauritius Assurance Society Co. Ltd, periods 1952 to 2012 are available.
- FSC Bulletins
The different insurance concern categories could be traced in the FSC statistical bulletins. Facts and elaborate figures were obtained in them and through the assorted communiques of the FSC.
4.1.3 Sample Size
For this analysis, a sample of 3 insurance companies was selected from a population of 22 insurance companies in Mauritius. The sample is a portion of a population, or a little part of participants drawn from a population that is capable of giving satisfactory consequences as would hold been provided by the population ( Kadam & A ; Bhalerao, 2010 ) . The survey performed is on two insurance companies listed on the official market of the SEM and one on the DEM.
4.2. Variables
4.2.1 Conventional Performance
- Tax return on investing ( ROI )
Tax return on investing is a profitableness ratio that shows the value a steadfast gets from doing an investing. In other words, it is the hard currency benefits received from a undertaking.
- Tax return on Capital Employed
Tax return on capital employed is a step of a company’s net incomes to its sum of capital employed. To go on operation for a longer period, a company’s ROCE should be better than its cost of capital.
- Net incomes per portion
Net incomes per portion demo how much net income after revenue enhancement and penchant dividend is attributable to each ordinary portion. It is frequently regarded as a convenient step of success for a company.
- Dividend per portion
Dividend per portion is the amount of declared dividends for every ordinary portion issued. It is calculated by spliting the entire dividends paid out by the figure of outstanding ordinary portions issued.
4.2.2 Stock Performance
- Price net incomes Ratio
The monetary value net incomes ratio relates the market monetary value of a portion to the net incomes per portion. It determines whether a stock is overvalued or undervalued.
- Market Value per portion
- Market Capitalization
Market Capitalisation refers to the market value of the owner’s equity in a company. It is assessed by multiplying the stock monetary value by the figure of portions.
- Gross
IAS 18 defines gross as the entire reception of economic benefits in footings of hard currency or other related incomes produced from the day-to-day public presentation of a house.
- Debt Ratio
The debt to plus ratio is a solvency ratio. It indicates how much levered a company is. It is a step of the per centum of a firm’s assets which is being covered through debt.
- Loss Ratio
The loss ratio looks at the nexus which exists between claims incurred and premiums earned by insurance companies. A low loss ratio shows less insurance escapes settled with persons. If loss ratios are high, risk direction policies must be reviewed.
4.3 Model
The theoretical account in this survey is adapted from Pesaran ( 1997 ) , who attempts to place the long tally connexion of different economic variables in a theoretical account. For the intent of my survey, a clip series analysis is being done on the fiscal public presentation of three insurance companies in Mauritius viz. Swan Insurance Co. Ltd, Mauritian Eagle Insurance Co. Ltd and Anglo Mauritius Assurance Society Co. Ltd, based on different variables defined in subdivision 4.2.0.1. By taking into history of import events such as their listing on the SEM, amalgamations and relevant crises, dummy variables will be introduced in the class of the survey as noted in the work of Pahlavani, Wilson and Worthington ( 2005 ) .
A simple autoregressive theoretical account can be written as:
4.3.1 Advantages of the ARDL Model
Pesaran and Al ( 2001 ) identified several benefits of the ARDL in their empirical literature. For case, the theoretical account overcomes the defects of the Johansen cointegration techniques which favour big samples of informations. As such, it is more sensible as it requires a little sample of informations [ 2 ] . Furthermore, the ARDL ignores the fact that all variables in a theoretical account should be of the same magnitude. The ARDL is applicable regardless of the variables being I ( 0 ) , I ( 1 ) or the arrested development incorporating a combination of both ( Pesaran and al, 2001 ) . Another advantage of the ARDL is that it is suited to be used in instance research workers do non understand the unit root characteristics. Problems associated to its proving are waned and this leaves out any incorrect judgement about the consequences [ 3 ] .
4.3.2 Trials to be used
- Testing for stationarity
The one-year clip series informations should be tested for unit roots to look into for stationarity. Normally, the Dickey Fuller ( DF ) , the Augmented Dickey Fuller ( ADF ) or the Phillips-Peron ( PP ) unit root trials can be carried out. In this analysis, the ADF trial is used. Non-stationary clip series may take to the job of specious arrested development and the consequences of the arrested development analysis will non be valid. Distinguishing a non stationary clip series will change over it to stationary.
- Testing for cointegration
Once variables are found to be stationary, we have to happen out whether they are cointegrated. That is, whether a long term relationship exists between two variables or is at that place equilibrium. Although single variables are found to be nonstationary, a additive combination of two or more clip series can be stationary. To prove for cointegration, the Augmented Engle-Granger ( AEG ) trial can be used.
- Testing for causality
4.4 Constraints
- Data Collection was a drawn-out procedure whereby several assignments were fixed with the different establishments so as to acquire the relevant information. A missive from the university was required to be presented to each insurance company, to the stock exchange of Mauritius and to the Registrar of companies for the intent of roll uping informations. Photocopies of past fiscal statements were done and roll uping the relevant figures was rather a clip devouring stage.
- Past information for Mauritius Union Assurance Ltd were non available since they were already archived and recovering the information would hold taken a batch of clip as the company was undergoing an interim audit.
- The acceptance of the International Financial Standards has caused certain comparison jobs to happen as past fiscal statements and recent 1s do non hold the same headers.
4.5 Drumhead
The information and methodological analysis chapter shows how to continue with the arrested development, the informations to be used and the econometrics techniques. The different trials have been calculated utilizing the Eviews 7 package bundle.
Pesaran, M. H. ( 1997 ) . An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis ¤ .
