Firm specific factors that determine insurance companies’ performance in ethiopia
TL;DR: In this paper, the authors investigated the impact of firm level characteristics (size, leverage, tangibility, loss ratio (risk), growth in writing premium, liquidity, leverage and loss ratio) on performance of insurance companies in Ethiopia.
Abstract: The performance of any business firm not only plays the role to improve the market value of that specific firm but also leads towards the growth of the whole sector which ultimately leads towards the overall prosperity of the economy Assessing the determinants of the performance of organizations has gained importance in the corporate finance literature; however, in the context of insurance sector, it has received little attention particularly in Ethiopia Accordingly, this study investigated the impact of firm level characteristics (size, leverage, tangibility, Loss ratio (risk), growth in writing premium, liquidity and age) on performance of insurance companies in Ethiopia Return on total assets (ROA) - a key indicator of insurance company's performance- is used as dependent variable while age of company, size of the company, growth in writing premium, liquidity, leverage and loss ratio are independent variables The sample includes 9 insurance companies over the period 2005-2010 The audited annual reports (Balance sheet and Profit/Loss account) of insurance companies were obtained from National Bank of Ethiopia (NBE) and insurance companies’ annual publication reports The results of regression analysis reveal that insurers’ size, tangibility and leverage are statistically significant and positively related with return on total asset; however, loss ratio (risk) is statistically significant and negatively related with ROA Thus, insurers’ size, Loss ratio (risk), tangibility and leverage are important determinants of performance of insurance companies in Ethiopia But, growth in writing premium, insurers’ age and liquidity have statistically insignificant relationship with ROA
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24 Feb 2014-International Journal of Academic Research in Accounting, Finance and Management Sciences
TL;DR: In this paper, the authors analyze the determinants of the financial performance in the Romanian insurance market during the period 2008-2012, by applying specific panel data techniques, according to the final results achieved by applying certain panel-based techniques, the determinant of financial performance are the financial leverage in insurance, company size, growth of gross written premiums, underwriting risk, risk retention ratio and solvency margin.
Abstract: The financial analysis of a company is an important tool used by actuaries in the process of decision- making on underwriting and investment activities of the insurance company. The financial performance of insurance companies is also relevant within the macroeconomic context since the insurance industry is one of the financial system’ components, fostering economic growth and stability. The financial performance of insurance companies can be analyzed at micro and macroeconomic level, being determined both by internal factors represented by specific characteristics of the company, and external factors regarding connected institutions and macroeconomic environment. This study attempts to analyze the determinants of the financial performance in the Romanian insurance market during the period 2008–2012. According to the final results achieved by applying specific panel data techniques, the determinants of the financial performance in the Romanian insurance market are the financial leverage in insurance, company size, growth of gross written premiums, underwriting risk, risk retention ratio and solvency margin.
107 citations
Cites background from "Firm specific factors that determin..."
...In this context, Mehari and Aemiro (2013) assess the impact of the Ethiopian insurance companies’ characteristics on their performance....
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TL;DR: In this article, the authors investigated the firm-specific factors affecting the profitability of non-life insurance companies operating in Turkey and found that the most important factors are the size of a company, age of the company, loss ratio, current ratio, and premium growth rate.
Abstract: This study investigates the firm-specific factors affecting the profitability of non-life insurance companies operating in Turkey. For this purpose, data of 24 non-life insurance companies operating in Turkey from the period 2006–2013 were brought together to obtain 192 observed panel data sets. In this study, profitability is measured by two different variables: technical profitability ratio and sales profitability ratio. According to the empirical results, the firm-specific factors affecting the profitability of Turkish non-life insurance companies are the size of the company, age of the company, loss ratio, current ratio, and premium growth rate.
74 citations
07 Nov 2018
TL;DR: In this paper, the authors explored the interrelationship between macroeconomic factors, firm characteristics and financial performance of quoted manufacturing firms in Nigeria and found no significant effect for interest rate, inflation rate, exchange rate and gross domestic product (GDP) growth rate, while the firm characteristics were size, leverage and liquidity.
Abstract: Purpose
The purpose of this paper is to explore the interrelationship between macroeconomic factors, firm characteristics and financial performance of quoted manufacturing firms in Nigeria. Specifically, the study investigates the effect of interest rate, inflation rate, exchange rate and the gross domestic product (GDP) growth rate, while the firm characteristics were size, leverage and liquidity. The dependent variable financial performance is measured as return on assets (ROA).
Design/methodology/approach
The study used the ex post facto research design. The population comprised all quoted manufacturing firms on the Nigerian Stock Exchange. The sample was restricted to companies in the consumer goods sector, selected using non-probability sampling method. The study used multiple linear regression as the method of validating the hypotheses.
Findings
The study finds no significant effect for interest rate and exchange rate, but a significant effect for inflation rate and GDP growth rate on ROA. Second, the firm characteristics showed that firm size, leverage and liquidity were significant.
Practical implications
The study has implications for regulators and policy makers in formulating policy decisions. In addition, managers may better understand the interplay between macroeconomic factors, firm characteristics and profitability of firms.
Originality/value
Few studies have addressed the interplay of macroeconomic factors and firm characteristics in determining the profitability of manufacturing firms in the country and developing countries in general.
71 citations
Cites background from "Firm specific factors that determin..."
...Sambasivam and Ayele (2013) in Ethiopia, which proxied profitability as ROA, found that leverage and liquidity were significant and negative....
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...On a sample of insurance companies in Ethiopia, Mehari and Aemiro (2013) revealed that size and leverage were positive and statistically significant; however, liquidity was statistically non-significant....
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...Mehari and Aemiro (2013) examined firm-specific factors that determine performance in Ethiopia....
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TL;DR: In this article, an exploratory study investigating firm-specific internal factors that influence the profitability performance of selected life insurance firms in eight Asian countries (China, Hong Kong, Taiwan, Singapore, Japan, South Korea, Thailand and Malaysia) from 2008-2014.
Abstract: This study is an exploratory study investigating firm-specific internal factors that influence the profitability performance of selected life insurance firms in eight Asian countries (China, Hong Kong, Taiwan, Singapore, Japan, South Korea, Thailand and Malaysia) from 2008-2014. This paper aims to focus on internal rather than external factors based on the resource-based view suggesting that the internal resources of a firm are key to gaining competitive advantage.,The authors used panel data estimation model to test our six hypotheses on these eight selected countries for the period between 2008 and 2014.,A random effect model reveals that size, volume of capital and underwriting risk are significantly related to the profitability of Asian life insurance firm, measured as return on assets. Premium growth, asset tangibility and liquidity are insignificant predictors of the profitability performance of these life insurance firms.,Three implications of this study are that life insurance firms need to proactively tap new business opportunities by attracting younger generation customers via e-marketing technologies; secure larger capital base to finance their market expansion strategies; and focus on intangible resources such as goodwill, brand equity and reputation.,This study contributes to the literature by conducting an exploratory regional-based panel study of Asian life insurance firms to find common factors that contribute towards profitability. The study is conducted on a collective sample of Asian life insurance firms based on the premise that the firms included in the sample engage in cross-border activities and share the same international financial reporting standards. These commonalities allow us to treat the firms jointly in a somewhat similar Asian macroeconomic environment.
31 citations
Dissertation•
01 Jan 2013
TL;DR: In this paper, the authors conducted a study to determine the relationship between firm characteristics (size, div r ific tic n, k ragl:, liquidity, age, premium growth and claim experience) and financial performance of life insurance companies in Kenya.
Abstract: Organizational performance has attracted scholarly attention in corporate finance literature over several decades. However, in the conte ·t of in urance sector, it has received a little attention in developing economics. The objcctiv f thi tudy i to determine the r lationship between firm characteristics (size, div r ific tic n, k ragl.:, liquidity, age, premium growth and claim experience) and financial p 'rl( rman · r life insurance companies in Kenya. In order to carry out the study, sccondar dat ·t )r 17 I if< insurance companies over the period of 2008-2012 was obtained on the Iinam: hi p ·rf rman · from the annual reports and audited financial statements. Data collected was anal ' 7 ·d u ·1ng P ( tatistical Package for Social Scientists). Regression analysis was used to anal) z the data. The study iinding , indicate that the variables are statistically significance to influencing financial performance of life in urance companies as indicated by the positive and strong Pearson correlation coefficients. This implies that premium growth is relied upon to make conclusions about th financial performance of life insurance companies' as shown by its strong and positive correlation coefficients. Based on the findings, the study recommends that insurers must work towards improving the premiums earned to increase profits. Further studies should be undertaken to analyze the different sectors in the economy to determine any significant differences in the relationship between firm characteristics and financial performance in the different sectors incorporating more independent variables.
31 citations