An Empirical Study On Efficiency For Merger & Acquisition Between The Bank Of Communications And An Insurance Company

With the ongoing development of global financial industry and gradual change of social environment and demographic structure, the demand from the mass customers to savings and insurance products has become increasingly diversified. Therefore, the mixed operation model between bank and insurance has been valued by most financial institutions. Bancassurance business in western countries had experienced a dramatic development since 1990s, with many countries developed into an advanced cooperation mode dominated by merger & acquisition between banks and insurance companies. The China's bancassurance business starts relatively late, but with China's financial supervision system getting lax and continued deepening of the cooperation between bank and insurance, merger & acquisition has become an important means for equity integration between banks and insurance companies.This paper selects the case of acquiring China Life CMG by the Bank of Communications as its focus of study. On the basis of defining the concept of bancassurance and efficiency of merger & acquisition, as well as analyzing the motivations for merger & acquisition, the author further elaborates on a number of aspects, including the context of merger & acquisition, motivations, process and integration. Moreover, using DEA as its main analysis method and financial indicator analysis as its supplementary one, this paper makes a relatively comprehensive measurement by combining the data of three years before and after the merger & acquisition, in particular, it analyses in greater detail the relative change of efficiency from four aspects, namely the profitability, capacity for revenue growth, quality of assets and solvency respectively.The research finds out that though such merger & acquisition has put the operation and management capabilities of the Bank of Communications into a bottleneck stage, in which some phenomena like uneven asset allocation and wasteful and redundant resources appear, it also shows a risen profitability, declined business risks, good solvency and sound asset quality that is fluctuating within a reasonable range. After merger and acquisition, the profitability of BoCommlife declined first and then bounced up. Although it still suffers financial deficit, it has shown a great momentum of development in addition to the substantial improvement of its capacity for revenue growth, solvency and its quality of assets. The synergistic effect, after merger & acquisition, begins to emerge in that its financial condition has been improved. On the whole, this merger & acquisition is beneficial and successful. The experience in this case has enlightened us that in order to meet both the challenges and opportunities in the future, bancassurance enterprises established by merger & acquisition should improve their integration from the aspects of products, clients, channels, etc., maintain a balanced asset allocation, set on a course of differentiated development and attach importance to the training of versatile financial talents.