Browsing by Author "Tekalign, Birhanu"

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    Effects of Underwriting Result and Investment Income to the Profitability of Private Insurance Companies in Ethiopia
    (Addis Ababa University, 2018-06) Tekalign, Birhanu; Abdurezak, Mohamed (PhD)
    Ethiopia’s insurance industry is one of the least developed in the world based on the commonly used measurements, penetration rate and density. Many factors may have contributed to this stagnation. It is commonly anticipated that the performance and profitability of insurance industry is the result of its underwriting performance and efficient investment portfolio management. But for companies in Ethiopia it is claimed that neither is doing well, especially their trend of high dependence on interest income in recent years, is putting the prospect of the sector in jeopardy. The purpose of this study is therefore to investigate the effects of underwriting profit and investment income on profitability of Ethiopia’s private Insurance market. The study conducted on all private insurance companies in the industry who operate on non-life insurance and who have also been operating at least for full five budget years until 30th of June, 2017. Quantitative research technique has been used. Then the data variables from the revenue accounts of the companies have been analyzed using SPSS software version 23 with descriptive statistics and more importantly, a multiple regression model adopted on at least five years revenue accounts of the insurance companies to analyze the relation between the variables and their contribution to profitability. According to the findings of the study there was a positive relationship between the independent variables and the dependent variable with the investment income having a relatively strong positive relation with profit before tax. There was also weak positive relationship between the underwriting profit and investment income. Finally both policy and future study recommendations have been put forward. Some recommendations have also been forwarded to the management of the insurance companies in such a way that the correlation can be improved if insurance underwriting is viewed as a risk transfer process and not just a wealth generation endeavor.