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Determinants of Non-Life Insurer Profitability in Turkey

Year 2020, Volume: 24 Issue: 4, 1779 - 1797, 31.12.2020

Abdurrahman Özen , Erhan Çankal

Abstract

Profitability is important for insurance companies as it is indicator of whether they are able to continue their activities and fulfill their obligations to policyholders. The aim of this study is to find out most important firm-specific and macroeconomic variables affecting profitability of non-life insurance companies in Turkey. The study for non-life insurance companies covers the period between 2006 and 2017 for 21 companies. ROA is used as measure of profitability. According to the fixed effects panel data model results: there is statistically significant positive relationship with size, liquidity, investment yield, age, GDP growth rate, interest rate and profitability while there is negative relationship with premium growth rate, loss ratio, leverage ratio, solvency and profitability.

Keywords

Insurance Panel data Profitability ROA

References

  • Adams, M., & Buckle, M. (2003). "The determinants of corporate financial performance in the Bermuda insurance market" [Bermuda Sigorta Piyasasında Finansal Performans Belirieyicileri]. Applied Financial Economics, 13(2):133–143.
  • Ahmad, G. N., & Prasetyo, R. P. (2018). Profitability analysis of non-life insurance: Case in Indonesia stock exchange. International Conference on Islamic Finance, Economics and Business Volume 2018. https://doi.org/10.18502/kss.v3i8.2518. 05.04.2019
  • Baltagi, B.H. (2005). Econometric Analysis of Panel Data, Third edition. John Wiley & Sons, Ltd, 1.
  • Berhe, T. A., & Kaur, J. (2017). "Determinants of insurance companies’ profitability: analysis of insurance sector in Ethiopia" [Sigorta Şirketlerinin Karlılığının Belirleyicileri: Etyopya'da Sigorta Sektörünün Analizi]. International Journal of Research in Finance and Marketing, 7(4): 124–137.
  • Brigham, E. F., & Ehrhardt, M. C. (2011). Financial Management Theory and Practice. 13th Edition. South-Western.
  • Burca, A.M., & Batrinca, G. (2014). "The determinants of financial performance in the Romanian insurance market" [Romanya Sigorta Piyasasında Finansal Performansın Belirleyicileri]. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1):299–308.
  • Doğan, M. (2013). Sigorta firmalarının sermaye yapısı ile karlılık arasındaki ilişki : Türk sermaye piyasası üzerine bir inceleme. Muhasebe ve Finansman Dergisi, Ocak 2013:121–136.
  • Dorofti, C., & Jakubik, P. (2015). Insurance sector profitability and the macroeconomic environment. EIOPA Financial Stability Report- Thematic Articles, 4: 1–11.
  • Hailegebreal, D. (2016). Macroeconomic and firm specific determinants of profitability of insurance industry in Ethiopia. Global Journal of Management and Business Research: C Finance, 16(7).
  • Insurance Association of Turkey. https://www.tsb.org.tr/resmi-istatistikler.aspx? pageID=909
  • Jadi, D. M. (2015). An empirical analysis of determinants of financial performance of insurance companies in the United Kingdom. Ph.D. thesis, University of Bradford.
  • Kakani, R. K., Saha, B., & Reddy, N. V. (2001). Determinants of financial performance of Indian corporate sector in the post-liberalization era: An exploratory study, NSE Research Initiative Paper, 5: 12- 30.
  • Lee, C.-Y. (2014). "The effects of firm specific factors and macroeconomics on profitability of property-liability insurance industry in Taiwan" [Tayvan'da Makroekonomik ve Firma Özelliklerinin Sigorta Karlılığı Üzerine Etkileri]. Asian Economic and Financial Review, 4(5): 681–691.
  • Mehari, D., & Aemiro, T. (2013). "Firm specific factors that determine insurance companies’ performance in Ehiopia" [Etyopya'da Sigorta Şirketlerinin Karlılığını Etkileyen Firma Özellikleri]. European Scientific Journal, 9(10): 245–255.
  • Ministry of Treasury and Finance. 2018 yılı Türkiye'de Sigortacılık ve Bireysel Emeklilik Faaliyetleri Hakkında Rapor. https://www.hmb.gov.tr/sigortacilik-ve-ozel-emeklilik-raporlari. 16.01.2020.
  • Ministry of Treasury and Finance. https://www.hmb.gov.tr/sigorta-sirketleri O’ Brien, R. M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality & Quantity, 41: 673–690.
  • Öner Kaya, E. (2015). The effects of firm-specific factors on the profitability of non-life insurance companies in Turkey. International Journal of Financial Studies, 3:510–529.
  • Öner Kaya, E., Kaya, B. (2015). Türkiye'de Hayat Sigortası Şirketlerinin Finansal Performansını Belirleyen Firmaya Özgü Faktörler: Panel Veri Analizi. Finansal Araştırmalar ve Çalışmalar Dergisi, 7(12):93.
  • Pavic Kramaric, T., Miletic, M., & Pavic, I. (2017). "Profitability determinants of insurance markets in selected central and eastern European countries" [Seçilmiş Orta ve Doğu Avrupa Ülkelerinde Sigorta Piyasasında Karlılık Belirleyicileri]. International Journal of Economic Sciences, 2: 100–123.
  • Pervan, M., Ćurak, M., & Marijanović, I. (2012). Dynamic panel analysis of b&h insurance companies’ profitability. Proceedings of the 4th WSEAS World Multiconference on Applied Economics, Business and Development, Porto, Portugal, 1–3 July 2012; 158–163.
  • Reshid, S. (2015). Determinants of Insurance Companies Profitability in Ethiopia. Masters in finance thesis. Addis Ababa University.
  • Sayılgan, G. (2010). İşletme Finansmanı, 4. Bası. Ankara, Turhan Kitabevi, 133.
  • Shiu, Y. (2004). "Determinants of United Kingdom general insurance company performance" [Birleşik Krallık Genel Sigorta Şirketlerinde Karlılık Belirleyicileri]. British Actuarial Journal, 10(5): 1079–1110.
  • Veleva, M. (2017). Determinants of non-life insurers profitability in Bulgaria for the period 2006-2014. https://ceeol.com/search/article-detail?id=575873. 06.04.2019.
  • Yerdelen Tatoğlu, (2018) F. Panel Veri Ekonometrisi Stata Uygulamalı, 4. Baskı. İstanbul, Beta Basım Yayım Dağıtım, 5-226.

Year 2020, Volume: 24 Issue: 4, 1779 - 1797, 31.12.2020

Abdurrahman Özen , Erhan Çankal

Abstract

References

  • Adams, M., & Buckle, M. (2003). "The determinants of corporate financial performance in the Bermuda insurance market" [Bermuda Sigorta Piyasasında Finansal Performans Belirieyicileri]. Applied Financial Economics, 13(2):133–143.
  • Ahmad, G. N., & Prasetyo, R. P. (2018). Profitability analysis of non-life insurance: Case in Indonesia stock exchange. International Conference on Islamic Finance, Economics and Business Volume 2018. https://doi.org/10.18502/kss.v3i8.2518. 05.04.2019
  • Baltagi, B.H. (2005). Econometric Analysis of Panel Data, Third edition. John Wiley & Sons, Ltd, 1.
  • Berhe, T. A., & Kaur, J. (2017). "Determinants of insurance companies’ profitability: analysis of insurance sector in Ethiopia" [Sigorta Şirketlerinin Karlılığının Belirleyicileri: Etyopya'da Sigorta Sektörünün Analizi]. International Journal of Research in Finance and Marketing, 7(4): 124–137.
  • Brigham, E. F., & Ehrhardt, M. C. (2011). Financial Management Theory and Practice. 13th Edition. South-Western.
  • Burca, A.M., & Batrinca, G. (2014). "The determinants of financial performance in the Romanian insurance market" [Romanya Sigorta Piyasasında Finansal Performansın Belirleyicileri]. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1):299–308.
  • Doğan, M. (2013). Sigorta firmalarının sermaye yapısı ile karlılık arasındaki ilişki : Türk sermaye piyasası üzerine bir inceleme. Muhasebe ve Finansman Dergisi, Ocak 2013:121–136.
  • Dorofti, C., & Jakubik, P. (2015). Insurance sector profitability and the macroeconomic environment. EIOPA Financial Stability Report- Thematic Articles, 4: 1–11.
  • Hailegebreal, D. (2016). Macroeconomic and firm specific determinants of profitability of insurance industry in Ethiopia. Global Journal of Management and Business Research: C Finance, 16(7).
  • Insurance Association of Turkey. https://www.tsb.org.tr/resmi-istatistikler.aspx? pageID=909
  • Jadi, D. M. (2015). An empirical analysis of determinants of financial performance of insurance companies in the United Kingdom. Ph.D. thesis, University of Bradford.
  • Kakani, R. K., Saha, B., & Reddy, N. V. (2001). Determinants of financial performance of Indian corporate sector in the post-liberalization era: An exploratory study, NSE Research Initiative Paper, 5: 12- 30.
  • Lee, C.-Y. (2014). "The effects of firm specific factors and macroeconomics on profitability of property-liability insurance industry in Taiwan" [Tayvan'da Makroekonomik ve Firma Özelliklerinin Sigorta Karlılığı Üzerine Etkileri]. Asian Economic and Financial Review, 4(5): 681–691.
  • Mehari, D., & Aemiro, T. (2013). "Firm specific factors that determine insurance companies’ performance in Ehiopia" [Etyopya'da Sigorta Şirketlerinin Karlılığını Etkileyen Firma Özellikleri]. European Scientific Journal, 9(10): 245–255.
  • Ministry of Treasury and Finance. 2018 yılı Türkiye'de Sigortacılık ve Bireysel Emeklilik Faaliyetleri Hakkında Rapor. https://www.hmb.gov.tr/sigortacilik-ve-ozel-emeklilik-raporlari. 16.01.2020.
  • Ministry of Treasury and Finance. https://www.hmb.gov.tr/sigorta-sirketleri O’ Brien, R. M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality & Quantity, 41: 673–690.
  • Öner Kaya, E. (2015). The effects of firm-specific factors on the profitability of non-life insurance companies in Turkey. International Journal of Financial Studies, 3:510–529.
  • Öner Kaya, E., Kaya, B. (2015). Türkiye'de Hayat Sigortası Şirketlerinin Finansal Performansını Belirleyen Firmaya Özgü Faktörler: Panel Veri Analizi. Finansal Araştırmalar ve Çalışmalar Dergisi, 7(12):93.
  • Pavic Kramaric, T., Miletic, M., & Pavic, I. (2017). "Profitability determinants of insurance markets in selected central and eastern European countries" [Seçilmiş Orta ve Doğu Avrupa Ülkelerinde Sigorta Piyasasında Karlılık Belirleyicileri]. International Journal of Economic Sciences, 2: 100–123.
  • Pervan, M., Ćurak, M., & Marijanović, I. (2012). Dynamic panel analysis of b&h insurance companies’ profitability. Proceedings of the 4th WSEAS World Multiconference on Applied Economics, Business and Development, Porto, Portugal, 1–3 July 2012; 158–163.
  • Reshid, S. (2015). Determinants of Insurance Companies Profitability in Ethiopia. Masters in finance thesis. Addis Ababa University.
  • Sayılgan, G. (2010). İşletme Finansmanı, 4. Bası. Ankara, Turhan Kitabevi, 133.
  • Shiu, Y. (2004). "Determinants of United Kingdom general insurance company performance" [Birleşik Krallık Genel Sigorta Şirketlerinde Karlılık Belirleyicileri]. British Actuarial Journal, 10(5): 1079–1110.
  • Veleva, M. (2017). Determinants of non-life insurers profitability in Bulgaria for the period 2006-2014. https://ceeol.com/search/article-detail?id=575873. 06.04.2019.
  • Yerdelen Tatoğlu, (2018) F. Panel Veri Ekonometrisi Stata Uygulamalı, 4. Baskı. İstanbul, Beta Basım Yayım Dağıtım, 5-226.
There are 25 citations in total.

Details

Primary Language English
Journal Section Makaleler
Authors

Abdurrahman Özen 0000-0002-2477-8701

Erhan Çankal 0000-0001-5115-055X

Publication Date December 31, 2020
Published in Issue Year 2020 Volume: 24 Issue: 4

Cite

APA Özen, A., & Çankal, E. (2020). Determinants of Non-Life Insurer Profitability in Turkey. Atatürk Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 24(4), 1779-1797.
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