Abstract:
It is crystal clear that insurance is one of the major risk reduction and diversification tool in
modern economy which became a cause for the existence and survival of financially strong
insurance companies both in simple and complex economy. For Insurers to be reliable and
financially sound, their profitability and most importantly knowing what factors makes them
profitable is very crucial and that is why this study made its major objective to identify those
factors which have significant effect on the profitability of insurance in general and awash
insurance specifically. In order to achieve this objective, this study used quantitative research
approach using Panel data collected from awash insurance company’s financial report and IMF
covering ten-year period from 2012-2022.Thestudy usedregression model to see the effect of
independent variables which were the factors under study on dependent variable profitability
proxies by ROE and data collected was analyzed with a stata64 software. The findings of the
study showed that Size of company, solvency ratio, liquidity, loss ratio and leverage have
statistically significant relationship with insurers’ profitability. However, the two macro economic factors, growth rate of GDP and inflation rate have negative but insignificant
relationship with profitability. The study provided evidence that company size, Loss ratio, and
Leverage are most important factors affecting profitability of awash insurance company.
Therefore, the study recommends that awash insurance company should give due consideration
to these factors to appropriately address its profitability issues
