Factors Determining Profitability of the Insurance Industry of Bangladesh (original) (raw)

Determinants of Insurance Companies Profitability: An Analysis of Insurance Sector of Pakistan

2011

Insurance services are now being integrated into wider financial industry and the insurance sector plays an important role in service based economy of Pakistan. Profitability is one of the most important objectives of financial management because one goal of financial management is to maximize the owner` s wealth and profitability is very important determinants of performance. This paper investigated the determinants of profitability in insurance companies of Pakistan. Specifically this examine the effects of firm specific factors (age of company, size of company, volume of capital, leverage ratio and loss ratio) on profitability proxied by ROA. A key indicator of insurance companies profitability is return on assets (ROA), defined as the before tax profit divide by total assets (TA). Profitability is dependant variable while age of company, size of company, volume of capital, leverage and loss ratio) are independent variables. The sample in this study includes 35 listed life and no...

DETERMINANTS OF INSURANCE COMPANIES PROFITABILITY: ANALYSIS OF NON-LIFE INSURANCE COMPANIES IN NEPAL

The research paper aims to assess the relationship between financial performances with company size, liquidity, leverage and underwriting risk of non-life insurance companies in Nepal with ten years published data from five nonlife insurance companies in Nepal. The descriptive and analytical research design is adopted in the research. The cause and effect relationship is analyzed through the employment of regression and correlation analysis. The whole observation is fifty firm-years observations. The correlation, multiple regression analysis and F-statistic are accustomed to determine the relative importance of variables in influencing financial performance. The study concludes that the sizes of the non-life insurance companies have significant positive impact on non life insurances' profitability. The liquidity fluctuations don't have impact on the performance of non life insurance companies in Nepal. The non-life insurance companies with upper leverage have shown lower financial performance. The study further concludes that whatever changes in benefits paid and net premium, non-life insurance companies ROA would haven't any changes. The dimensions of non depository financial institutions and leverage are the foremost variables to influence the financial performance of the non-life insurance companies in Nepalese context

Determinants of Profitability of Insurance Companies in Nepal

Patan prospective journal, 2023

The ability of a corporation to turn a profit from all of its business endeavors is expressed by its profitability. It demonstrates how well management uses all available resources to generate profit. This study attempts to investigate the determinants of profitability of insurance companies in Nepal. This study is based on secondary data of 15 sample insurance companies using convenient sampling and it covers the period 2016/17 to 2020/21 with 75 observations. The results of this study revealed that expense ratio, financial leverage, claim ratio and size of company have impact on profitability of the insurance companies in Nepal. Expense ratio and claim ratio have significant negative and financial leverage and size of company have positive impact on profitability of the insurance companies in Nepal. This study also revealed the insignificant effect of age on profitability of insurance companies.

Factors affecting the profitability of Nepalese insurance companies

Nepalese Journal of Insurance and Social Security, 2021

This study examines the factors affecting profitability in the context of Nepalese insurance companies. Return on assets and return on equity are selected as the dependent variables. The selected independent variables are liquidity, tangibility, premium growth, firm age and firm size. The study is based on secondary data of 21 insurance companies with 168 observations for the period from 2011/12 to 2018/19. The data is collected from the reports published by Beema Samiti and Annual Reports of selected insurance companies. The regression models are estimated to test the factor affecting the profitability of Nepalese insurance companies. The study showed that firm size has a positive impact on return on assets and return on equity. It indicates that larger firm size leads to increase in return on assets and return on equity. Likewise, premium growth has a positive impact on return on assets and return on equity. It indicates that higher the premium growth, higher would be the return o...

Determinants of Insurance Companies' Profitability in Ethiopia

2014

This paper examined the effects of firm specific factors (size of company, leverage ratio, liquidity ratio, loss ratio/ risk, tangibility of assets, growth and managerial efficiency) and macroeconomic factors (economic growth and inflation) on profitability peroxide by ROA. The sample in this study includes ten insurance companies for six years (2008-2013). Secondary data obtained from the financial statements (Balance sheet and Profit/Loss account) of insurance companies, and financial publications of MOFED are analyzed. From the regression result; size, leverage, tangibility of asset, loss ratio/ risk, firm growth and managerial efficiency are identified as significant determinants of profitability hence firm size, tangibility of asset, firm growth and, managerial efficiency are positively related. In contrast, leverage and loss ratio/ risk are negatively but significantly related with profitability. Liquidity, inflation, and economic growth are not significant determinants of pro...

Factors affecting profitability of insurance companies in Ethiopia

2019

Insurance is one of the major risks mitigating mechanism in modern economy. The existence and survival of financially strong insurance companies is therefore inevitable. For insurers to be reliable and financially sound, their profitability and most importantly knowing what factors makes them profitable is very crucial objective. In order to achieve this objective, this study used quantitative research approach using Panel data covering ten-year period from 2009–2018 for nine insurance companies. The study used linear regression model to see the effect of independent variables, which were the factors under study, on dependent variable profitability peroxide by ROA. Data was analyzed with software Eviws8.The findings of the study showed that market share and managerial efficiency have statistically significant relationship with insurers' profitability, and liquidity is positively less significant relationship with profitability. Whereas the Volume of capital, inflation and GDP ar...

Factors Affecting Profitability of Insurance Companies in Ethiopia: Panel Evidence

2020

Profitability is one of the most important objectives of financial management because one goal of financial management is to maximize the owner` s wealth. This paper examined the effects of firm specific factors (age of company, size of company, leverage ratio, premium growth rate liquidity ratio and tangibility of assets) on profitability proxied by ROA. Profitability is dependent variable while age of company, size of company, premium growth rate,leverage liquidity ratio and tangibility of assets) are independent variables. The sample in this study includes nine of the listed insurance companies for twelve years (2005-2016). Secondary data obtained from the financial statements (Balance sheet and Profit/Loss account) of insurance companies, financial publications of NBE are analyzed.Panel data analyzed using Random Effect Model (FEM) after testing the appropriateness of the model with Fixed Effect and Pooled regression model. From the regression results; size,premium growth rate a...

FACTORS INFLUENCING PROFITABILITY OF INSURANCE COMPANIES IN NEPAL

IAEME PUBLICATION, 2020

The main purpose of the study to examine the variables that influencing profitability of Nepalese insurance companies. The study base on 10 insurance companies panel data for 2012/13 to 2017/18 over five year period and leading to 50 observations. The study has been taken Return on Equity (ROE) as profitability measures and as dependent variables. The study also has been employees Expenses Ratio(ER), Financial Leverage (FL) and Size of Company (LnTA) factors as independent variables. The data has been processing with the help of SPSS 25 Software. The results reveals that expenses ratio other independent variables have positive relationship found. The results of study concluded that the financial leverage and size have major determinants of the profitability in Nepalese insurance companies.

DETERMINANTS OF PROFITABILITY OF INSURANCE FIRMS IN GHANA

The general objective of the study is to find out the determinants of the profitability of insurance firms in Ghana. Secondary data on financial reports were collected from sixteen insurance firms in Ghana for the period 2005 to 2010.The study was quantitative in nature. It adopted the longitudinal time dimension, specifically, the panel method and ordinary least square regression. The study discovered that, apart from tangibility which has a negative relationship, there is a positive relationship between leverage, liquidity and profitability of insurance firms in Ghana. It was also concluded that, the profitability model adopted has been explained in respect to all the independent variables and that the degree of error is less than 20%. Finally, it is suggested that the explanatory variables used in this study should be regressed on Return on Equity to find their extent of relationship on profitability. 1.0 introduction The financial system comprises of financial institutions, financial instruments and financial markets that provide an effective payment, credit system and risk transfer and thereby facilitate channelizing of funds from savers to the investors of the economy. According to Frederic S. Mishkin & Stanley G. Eakins (2009), financial markets and institutions not only affect your everyday life but also involve huge flows of funds – trillions of dollars-throughout our economy, which in turn affect business profits, the production of goods and services, and even the economic well-being of countries other than the United States. Indeed, a well-functioning financial markets and institutions are one of the most important key factors in producing high economic growth, and poorly performing financial markets and institutions are one of the reasons that many countries in the world remain desperately poor. Every firm is most concerned with its profitability. One of the most frequently used tools of financial ratio analysis is profitability ratios which are used to determine the company's bottom line. Profitability measures are important to company managers and owners alike. If a small business has outside investors who have put their own money into the company, the primary owner certainly has to show profitability to those equity investors. There has been a growing number of studies recently that test for measures and determinants of firm profitability. Financial industry's profitability has attracted scholarly attention in recent studies due to its importance in performance measurement. However, in the context of the Insurance sector particularly in developing countries or emerging markets like Ghana it has received little attention. According to a study conducted by Ahmed et al (2011) on the determinants of performance, it indicated that size, risk and leverage are important determinants of performance of life insurance companies of Pakistan. According to their study Return on Asset (ROA) has statistically insignificant relationship with growth, profitability, age and liquidity. According to Wright (1992), due to the unique accounting system used by life insurance companies, profitability of the industry has always been difficult to measure as compared with other financial institutions or corporations. For insurers, profitability is affected by a host of factors including actual mortality experience, investment earning, capital gains or losses, the scale of policyholder dividends, and federal and state taxes. Kasturi (2006) argued that the performance of insurance company in financial terms is normally expressed in net premium earned, profitability from underwriting activities, annual turnover, return on investment and return on