IMPACT OF INTERNAL (MICRO) AND EXTERNAL (MACRO) FACTORS ON PROFITABILITY OF INSURANCE COMPANIES

Yıl 2018, Cilt: 5 Sayı: 1, 35 - 57, 26.12.2017

Anum Rashıd Muhammad Usman Kemal

Öz

The research is conducted to analyze the impact of internal and external factors on the
profitability of insurance companies by taking into consideration three measures of profitability
of insurers that are overall profit (ROA), Underwriting Profit (UP), and Investment Income
(INI). Panel data regression is used for analysis of life insurance companies in Pakistan for a
period of 2006-2016. The findings of the study elucidate that Gross written premium, Expense
on management, Size, and Interest rate have a significant impact on the profitability of
insurance companies. The results show the underwriting losses that have been incurred by life
insurance companies, emphasized the need of separate and actuary departments for proper
validation of the policies. The paper facilitates the risk managers and regulatory authorities by
depicting the factors affecting the performance of insurance sector. The research helps the
management and policy makers in expediting the growth and performance of insurance sector. 

Anahtar Kelimeler

Profitability, Return on Assets (ROA), Underwriting Profit (UP), Investment Income (INI)

Kaynakça

• Ahmed, N., Ahmed, Z. and Usman, A. (2011).Determinants of performance: a case of life Insurance sector of Pakistan. International Research Journal of Finance and Economics, 61(2), 123-12. Akotey, O., Amaoh, L.Manso, F.and Sackey, F. (2016).The financial performance of life Insurance companies in Ghana. The Journal of Risk Finance, 14(3), 286-302. Batrina, G., &Burca, M. (2014).The determinants of financial performance in Romanian Insurance market. International Journal of Academic Research in Accounting, Finance, and Management Sciences, 4(1), 299-308. Beck, T., & Webb, I. (2010).Determinants of life insurance consumption across Countries Proceedings of World Bank on Insurance sector, Working paper no.2208. Bilal, K., Khan, J, Tufail, S. & Sehr, N. (2013).Determinants of Profitability Panel data: Evidence from Insurance sector of Pakistan. Management and Administrative Sciences Review, 2(1), 10-22. Brewer, E., Carson, M, Elysian, E, Mansur, I. & Scott. (2007).Interest rate risk and equity values of life insurance companies: A GARCH-M model. The Journal of Risk and Insurance, 74(2), 401-423. Charumathi, B. (2012).On the determinants of profitability of Indian life insurers: An empirical study. Proceedings of the World Congress on Engineering, WCE 2012, London, July 4-6. Chen, R., & Wong, K.A. (2004).The determinants of financial health of Asian insurance Companies. The Journal of Risk and Insurance, 71(3), 469-499. Chen, R., Wong, K.A. &Lee, H.C. (2009). Underwriting cycles in Asia. Journal of Risk and Insurance, 66(1), 29-47. Feyen, E., Lester, R. &Rocha, R. (2011).What drives the development of insurance sector? Proceedings of Finance and policy units. Working paper no.5572. Foong, Y., & Idris, R. (2012).Leverage, product diversity, and performance of general insurers in Malaysia. The Journal of Risk Finance, 13(4), 347-361. Gitman, L.J. (2007). Principles of Managerial finance, Addison Wesley. Ikonic, D. (2011).Growth potential and profitability analysis of insurance companies in the Republic of Serbia. Chinese Business Review, 10(11), 998-1008.