DETERMINING INTERNAL FACTORS AFFECTING FINANCIAL PERFORMANCE OF INSURANCE COMPANIES IN ETHIOPIA

Simon Nahusenay Ejigu

Abstract


Abstract

This study aims to determine factors affecting the financial performance of insurance companies in Ethiopia. The sample size consisted of nine insurance companies operating from 2005 to 2012. Financial performance is proxied by return on asset as dependent variable. The panel data collected from the financial statements of insurance companies is analyzed with multiple regression analysis by using STATA version 11.0. The finding shows that leverage ratio, liquidity ratio, company size, Management competence index and company growth rate are influential factors of financial performance. But, age of company and loss ratio has no effect on the financial performance of Insurance Companies in Ethiopia. A high consideration of increasing the company assets, using internal sources of financing and having highly qualified employees in the top managerial staff is advisable for insurance companies to enhance their performance.

 

Key words: financial performance, factors affecting, insurance companies


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