DETRMINANT OF INSURANCE COMPANIES’ PROFITABILITY IN ETHIOPIA

Abstract

This study address that internal factors((size of company, leverage ratio, liquidity Ratio,tangibility of assets, growth and volume of capital) and macroeconomic Factors (economic growth and inflation) effect on profitability lighten by ROA during the period of 2011-2017 for six year panel data. This study is quantitative research. From the total of seventeen insurance company nine insurance company were selected by the purposive sampling and secondary data were used which was obtained from the financial statements (Balance sheet and Income statement) of insurance companies. From the result of regression tangibility of asset, inflation, and economic growth are negatively related but significant determinants of profitability. However firm volume of capital, leverage, Liquidity, Firm Growth, Size. Not significant determinants of profitability. Generally the insurance managers should give high attention on firm macroeconomic Factors determinants of profitability. In the end, in order undoubtedly investigate the effect of determinant of profitability of insurance company the insurance manager have to give special attention by considering long period study on macroeconomic variables on profitability of insurance companies and further research should investigate based on insurance type (life and non-life) that would allowed better addressee for determinants of insurance company profitability.