FINC19011 Business Finance Assignment Sample

Here’s the best sample of FINC19011 Business Finance Assignment, written by expert.

Introduction

This essay is based on evaluating the business finance of HIH Insurance where critical factors related to the organisation will be discussed such as the financial goals of the company. The financial goal of the company helps in performing the task in an integrated manner so that the efficiency and productivity of the firm can be increased over the period (Waddock & Graves, 2014). During this essay, it will also discuss the agency issues, ethical consideration and corporate social responsibility of HIH insurance. All these critical issues will be discussed during this essay as it will provide a brief explanation of the issues that will be evaluated during this essay. HIH insurance as the company has been taken into consideration in this study in terms of performing the study systematically and conclusively. HIH insurance is the second-largest insurance company in Australia and was established in the year April 6th, 1988.

FINC19011 Business Finance Assignment

Financial goals of the company

HIH insurance is an Australia based financial service provider which provides health insurance to the people from the year 1988 to 2001. The financial goal of the company comprises of the joint venture with Allianz where the investment of more than 1 billion dollars has been estimated. The two companies had taken up the decision of sharing the profit of the business in a ratio of 49% and 51%. As part of the joint venture operation, Allianz took up the decision of investing $ 200 million in HIH insurance (Hih, 2019). The financial goal of HIH insurance also comprises of managing the accounting services and provisioning requirements that will help the company in managing capital margin along with the balance sheet of the firm. Moreover, the Australian based business firm has also taken up the decision of a good understanding of the general insurance markets both in Australia and internationally. Linking public information with company factors along with market knowledge into the whole Australian insurance market. The financial goal of the company also comprises increasing the awareness of direct insurance and inward reinsurance.

Agency issues

The agency issues that have been identified for HIH insurance was former HIH director Rodney Adler was sentenced to four-and-a-half years in prison. Adler was coinvestigated for four criminal charges such as two counts of disseminating information knowing it was false, one the count of obtaining money by false or misleading information and one count of being intentionally dishonest and failing to discharge his duties (Aph, 2019). Other, agency issues that have been identified in HIH insurance were stock market manipulation concerning the Australian Securities & Investment Commission, where HIH funds after Adler persuaded Ray Williams to shift $ 10 million from HIH to pacific Eagle Equities. Some of the critical agency issues that have also been identified in HIH insurance are the significant collapse of 2001 due to failure to perform audit profession, audit committee and legal liabilities. While evaluating the agency issue of HIH it has also been identified that they suffer from portfolio profitability and likely development.

Ethical consideration

The ethical consideration that HIH insurance had maintained while performing their business activities includes paying the price, where the organisation provided clear information related to price specification to the customers. Maintaining transparency in terms of building trust and integrity among the customers is the first and foremost ethical consideration that HIH insurance needs to maintain. Being working in the insurance industry HIH also needs to maintain ethical consideration of providing a disclosure statement to the customers where all the customers need to tell about the advantages and disadvantages of investing in the products and services (Hih, 2019). Confidentiality is another important ethical consideration that the firm has also maintained while working in the insurance industry such as all the customers’ needs to be provided with the confidentiality of financial and personal information. Furthermore, it has also been noticed that HIH insurance also maintains the ethical consideration of competence where the salesperson must have all the information related to LTCI products and services in terms of making the customer’s information about taxation and financial planning. 

Corporate social responsibility

HIH insurance company was also actively involved in corporate social responsibility where they took up the initiative of improving the lifestyle of the people. The company run-down health-related campaigns in Australia where they made the people informed about the importance of enjoying a healthy lifestyle. Through the health campaign, the insurance firm also aimed towards making the people about the negative effect of consuming high fat-containing food items. The company hosted a regular medical checkup camp for the customers. The Australian based firm has also taken up the opportunity of conserving the environment so that natural resources can be conserved (Gov, 2019). HIH insurance had taken up the initiative of planting trees all over Australia so that better lifestyle and biological environment can be maintained. Moreover, the insurance firm had also taken up the decision of reducing the carbon footprint from within the management so that sustainability within the business has been maintained.

Conclusion

Evaluating the essay it has been noticed that the financial goal of the company is to actively engage with the joint venture operation with Allianz where the investment of $ 1 billion has been made so that better financial activities can be maintained within the organisation. The firm has also taken up the financial decision of maintaining the capital margin along with increasing the revenue of the firm so that future growth opportunities along with the profitability of the firm have been retained within the business organisation. The agency issues that have been identified for HIH insurance that has been pointed out for the firm is stock market manipulation as a result of which the stock prices of the firm has reduced down. Disseminating false information is also a risk that has been identified in agency risk. The ethical consideration that has been maintained by the HIH insurance firm is maintaining transparency within the price of insurance along with providing detail information of the LTCI products and services. Finally, the corporate social responsibility of HIH insurance had also been explained in this essay.

References

Aph. (2019, September 2). Hihinsurance. Retrieved from Hihinsurance: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/archive/hihinsurance

Gov. (2019, September 2). The-rise-and-fall-of-hih-insurance-group. Retrieved from The-rise-and-fall-of-hih-insurance-group: https://treasury.gov.au/publication/economic-roundup-issue-1-2015/economic-roundup-issue-1/the-hih-claims-support-scheme/2-the-rise-and-fall-of-hih-insurance-group

Hih. (2019, September 2). Background. Retrieved from Background: https://www.hih.com.au/background

Hih. (2019, September 2). Home. Retrieved from Home: https://www.hih.com.au/

Waddock, S., & Graves, S. (2014). The corporate social performance–financial performance link. Strategic management journal, 18(4), 303-319.

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