Factors Affecting Profitability Of Insurance Company In Case Of Awashinsurance S.C. At Headquarter

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