Abebaw, Kassie (PhD.)Beletech, Menna Erbona2021-02-112023-11-042021-02-112023-11-042020-11http://etd.aau.edu.et/handle/123456789/25080A Thesis Submitted To The Department Of Accounting And Finance, College Of Business And Economics, Addis Ababa University In Partial Fulfillment Of The Requirements For Degree Of Master Of Science Accounting And FinanceThe insurance companies are exposed to various risks which originated from both the internal and external environment. Hence, the effect of financial risk has been considered to be an important issue on the performance of insurance companies. Therefore this study tried to examine the relationship between financial risk and financial performance of insurers in Ethiopia. In order to achieve this objective, the researcher used explanatory research design and quantitative research approach. Also the secondary Panel data covering eight (8) private insurance companies in Ethiopia for twelve (12) consecutive years (2007–2018) were analyzed by using STATA software. The study tried to examine the relationship between independent variables credit risk, liquidity risk, solvency risk, technical provision risk, reinsurance risk, underwriting risk, firm size and dependent variable ROA. The regression result showed that credit risk, solvency risk, and technical provisions risk have negative and significant effect at 1% and 5% significance level on performance of private insurance companies in Ethiopia, whereas Liquidity risk, reinsurance risk and firm size have positive and significant effect on ROA. The researcher concluded that financial risk has significant effect on the performance of Ethiopian insurance companies. On the basis of the findings, the study recommended that there is greater need for Ethiopia insurers to give due attention the financial risks particularly credit risk, liquidity risk, solvency risk, technical provision risk, reinsurance risk and firm size more integrally and to increase their size by enhancing their assets base.enFinancial performanceFinancial riskInsuranceThe Effect of Financial Risk on Performance of Private Insurance Companies in EthiopiaThesis