Factors Affecting Insurance Companies Profitability in Ethiopia

Abstract

Dereje Gebeyehu Ababu, Azmeraw Misganaw Getahun and Dagne Desta Ayele

Background: Every firm is most concerned with its profitability. One of the most frequently used tools of financial profitability analysis is the profitability ratio. The aim of this study was determinants of Insurance company’s profitability of in Ethiopia.

Methodology: To comply with the research objectives, the researcher focused on secondary data, which are obtained from annual reports of individual insurance companies and NBE. Both Descriptive statistics (frequency, percentage, mean, variance, etc.) and the Econometrics model (multiple linear regression model) were used to achieve the objectives of the study, and to analyze the data.

Results: The average and standard deviation for the profitability of insurance companies measured by using Return on assets (ROA) for Ethiopian insurance companies was 0.117 and 0.08, respectively. The result showed that the age of the company, Firm Growth, Company Size, Leverage, and market share are highly significant predictors of insurance companies' profitability in Ethiopia.

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