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Factors Influencing the Financial Performance of Non-Life Insurance Companies of Pakistan

Author

Listed:
  • Umair Saeed
  • Nouman Khurram

Abstract

Today insurance industry is being built-in into vast pecuniary sector and it acts as a vital sector for Pakistan’s economy. To maximize the wealth of owners is one of the key objectives of management of any company and it is desired by management to work for profit maximization of the organization. Current study scrutinizes the influences of precise estimators of organization (Size of firm, loss ratio, expense ratio, debt ratio, growth of premium and age of firm) on performance deputations by return on assets a measure of the profitability. To find the impact of firm’s specific factors on their return on asset the data is gathered from 24 non-life insurance companies of Pakistan from the period 2005-2013. The panel data techniques are employed to measure the impact on performance of non-life insurance companies. To extract their impact Hausman test is employed to decide whether fixed or random effect model is appropriate. The test guided us that fixed effect model is apt for current study. The findings of fixed effect model put forward that age and loss ratio proves significant in determining performance of non-life insurance companies of Pakistan. Present study is multipurpose for the administration of Pakistan’s insurance sector in shaping their future decision making process.

Suggested Citation

  • Umair Saeed & Nouman Khurram, 2015. "Factors Influencing the Financial Performance of Non-Life Insurance Companies of Pakistan," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(6), pages 354-361.
    • Handle: RePEc:rss:jnljef:v4i6p3
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    References listed on IDEAS

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    1. Demirguc, Asli & Huizinga, Harry, 1999. "Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence," The World Bank Economic Review, World Bank, vol. 13(2), pages 379-408, May.
    2. Athanasoglou, Panayiotis P. & Brissimis, Sophocles N. & Delis, Matthaios D., 2008. "Bank-specific, industry-specific and macroeconomic determinants of bank profitability," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(2), pages 121-136, April.
    3. William Greene & Dan Segal, 2004. "Profitability and Efficiency in the U.S. Life Insurance Industry," Journal of Productivity Analysis, Springer, vol. 21(3), pages 229-247, May.
    4. Bourke, Philip, 1989. "Concentration and other determinants of bank profitability in Europe, North America and Australia," Journal of Banking & Finance, Elsevier, vol. 13(1), pages 65-79, March.
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    Cited by:

    1. Amelia Bilbao-Terol & Mar Arenas-Parra & Raquel Quiroga-García & Celia Bilbao-Terol, 2022. "An extended best–worst multiple reference point method: application in the assessment of non-life insurance companies," Operational Research, Springer, vol. 22(5), pages 5323-5362, November.

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