Abstract:
The study examines determinants of financial performance of insurance companies in Ethiopia.
A panel data of 11 insurance companies with 12 years were purposely taken to test the
underlying hypothesis. Explanatory research design has been employed. The study used both
descriptive statistics and inferential methods of data analysis. In this study performance has been
operationalized by using three variables ROE, ROA and technical efficiency score. Thus, Pooled
OLS, Random Effects model and Tobit Regression Models have been used to estimate the
parameters. The result shows firm size, earnings growth, Inflation rate and GDP have negative
and significant effect of financial performance. However, firm age and liquidity have positive
significant effect on financial performance. The findings of the study will give a clue for policy
makers, insurance managers and other concerned bodies to maintain a health and sound
insurance sector.
