Determinants of Profitability in Life and Non-Life Insurance Sector of Pakistan: An Endogenous and Exogenous Evaluation

Rahman, Shams; Jan, Muhammad Farooq; Iqbal, Khursheed

doi:10.31384/jisrmsse/(2018).16.2.7

Cited by 4 publications

(2 citation statements)

References 2 publications

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“…Holding other independent variables constant at their average value, when liquidity increased by 1%, return on asset (ROA) of sampled Ethiopian insurance companies would increase by 5.74% and the relationship is statistically significant at 5% of significance level. This positive relationship is not expected but the result is consistent with previous studies which found a positive relationship between liquidity and ROA, for instance, Abate (2012) and Teklit and Jasmindeep (2017) liquidity has negative and significant effect on profitability but on the other hand, Behailu and Wolde (2016), Rahman et al (2018) and Sumaira and Amjad (2013) conclude liquidity has positive and significant effect on profitability. According to Naveed et al (2010), Charumathi (2012) and Emine (2015).…”

Section: Inferential Statisticssupporting

confidence: 88%

Determinants of profitability of insurance companies in Ethiopia: evidence from insurance companies from 2011 to 2020 years

Worku,

Bayleyegne,

Tafere

2024

J Innov Entrep

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The profitability of insurance companies has been the focus of several studies within the rise of economies across the countries worldwide. This study aimed to identify determinants of profitability of insurance companies in Ethiopian. The study used nine insurance companies selected by purposive sampling technique among the total 17 insurance companies in Ethiopia from period of 2011 to 2020 based on their establishment. Descriptive, causal research design and quantitative research approach were adopted in carrying out this study. Classical linear regression model under estimation of ordinary least square was employed to identify the determinants of profitability of insurance companies in Ethiopia at 5% level of significance. The classical linear regression model revealed that variable age of the company, tangibility of an asset, size of the company, managerial efficiency, leverage ratio, premium growth and GDP have a positive coefficient relationship with return on asset while loss ratio and inflation have a negative coefficient relationship with return on asset. On the other hand, age of the company size, managerial efficiency, leverage ratio, liquidity ration inflation and premium growth have statistically significant at 5% confidence interval level, whereas the other variables such tangibility of asset and GDP have no statistical significance at 5% confidence interval level. The insurance companies’ previous profit, age of the company, company size, managerial efficiency, leverage ratio, liquidity ratio, loss ratio, premium growth and inflation rate variables are significant key drivers of profitability of Ethiopian insurance companies. Giving due attention to the sector in line with key factors affecting the profitability will improve the overall performance of the insurance companies in Ethiopia.

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Section: Inferential Statisticssupporting

confidence: 88%

Determinants of profitability of insurance companies in Ethiopia: evidence from insurance companies from 2011 to 2020 years

Worku,

Bayleyegne,

Tafere

2024

J Innov Entrep

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“…In a study on Malaysia, GDP per capita was found to be significantly positive in determining the demand for life insurance products while the impact of Inflation was found negative (Noor et al, 2020). Rahman et al (2018) found leverage, business risk, and the rate of inflation to have a significantly negative impact on the performance of insurance companies in Pakistan. Inflation, interest rate, life expectancy, dependency ratio, and urbanisation were found to be positive in case of demand for life insurance in Ethiopia, and GDP per capita was found to be negative (Meko et al, 2019).…”

Section: Literature Surveymentioning

confidence: 99%

Do macro-economic factors drive life insurance growth An empirical analysis

Chakraborty¹,

Das²

2022

IJMEF

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The Indian Economy is fast coping up with the global competition and making its mark in the world economy. In the past two decades, the Insurance Industry in India has registered its growth in terms of escalating penetration and density, but the growth is not at par its true potential. This calls for a need to elevate the visibility of the insurance sector and to identify the factors that influence its growth. This study is an attempt to identify the macro-economic factors that influence the Life Insurance sector in India.A time series analysis involving data for 39 years was considered using empirical methods including Engle-Granger co-integration, ordinary least square, and granger causality. The results indicated that FDI, inflation, interest rate and broad money (M2) plays a significant role in the growth of Life Insurance industry in India and, inflation and interest rate has causal relation with life insurance sector.

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Predictors of Return on Assets and Return on Equity for Banking and Insurance Companies on Vietnam Stock Exchange

Pointer

Khoi

2019

EBER

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The objective of the article is to empirically examine the predictors of ROA and ROE for banks and insurance firms listed on the Vietnamese stock market. Research Design & Methods:The authors applied a quantitative approach. A basic OLS regression model is used to investigate key proposed predicators of ROA and ROE. Findings: Internal variables are statistically significant predictors for both ROA and ROE in the study, including firm size, book value, return on equity, years in business, and earnings per share. The direction of causality is not consistent across the ratios. Capital structure was significant and negative for ROE. Banks earned lower return on their assets and higher return on their equity than insurance companies. Implications & Recommendations: Given the significance of internal variables such as firm size, return on equity, book value, years in business and earnings per share as predictors of ROA and ROE, management must focus on improving its internal organizational structure which affects these variables. Years in business is significant for both ROA and ROE which may reflect managers' tacit knowledge. Firms should cultivate stability within its managerial staff. To aid future growth, management must secure the proper combination of debt to equity funding. Contribution & Value Added: This article confirms past findings of internal predictors of ROA and ROE in banking. It is one of the first studies to examine predictors of ROA and ROE for firms in the insurance industry. Article type:research article

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Determinants of Profitability in Life and Non-Life Insurance Sector of Pakistan: An Endogenous and Exogenous Evaluation

Cited by 4 publications

References 2 publications

Determinants of profitability of insurance companies in Ethiopia: evidence from insurance companies from 2011 to 2020 years

Determinants of profitability of insurance companies in Ethiopia: evidence from insurance companies from 2011 to 2020 years

Do macro-economic factors drive life insurance growth An empirical analysis

Predictors of Return on Assets and Return on Equity for Banking and Insurance Companies on Vietnam Stock Exchange

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