Factors Affecting Financial Performance of Non-life Insurances Companies in Ethiopia
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Date
2019-06
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Addis Ababa University
Abstract
This study intends to investigate the determinants of financial performance of selected non-life insurance companies in Ethiopia on the basis of secondary data eight years (2010-2017) period. The study selected sample of seven (7) non-life insurance companies to study them for a period of eight years (2010-2017) with total of 56 observations through panel data. Accordingly, the study used documentary analysis of companies‟ audited financial statements of non-life insurers which obtained from NBE and head office of each insurance company. The key explanatory variables were selected to disclose their relationship and influence on profitability measured by return on asset (ROA) from the prominent previous studies. The CLRM assumptions needed to be fulfilled for OLS that were tested and the residual was found to be homoscedastic, free of Multicollinearity, free of autocorrelation and normally distributed. The results of panel least square regression analysis indicated that company size, liquidity ratio, and efficiency have statistically significant and positive relationship with Non-life insurance business profitability. On the other hand, Reinsurer dependency, Inflation rate, Interest rate, and Leverage have a negative and statistically significant relationship with general insurance companies‟ profitability. Based on this finding, the study suggests that, the management bodies of the insurance companies should give high attention on firm and industry related variables, particularly on increasing their company size and efficiency to achieve superior profitability.
Description
A thesis submitted to department of accounting and finance, college of business and economics, Addis Ababa university in partial fulfillment
Of the requirement for the degree of Master of Science in Accounting and Finance
Keywords
Ethiopia, Firm specific, Insurance, Profitability