Factors Affecting Profitability Of Insurance Companies In Ethiopia Panel Evidence

Profitability is one of the most important objectives of financial management because onerngoal a/financial management is to maximize the owner's wealth. This paper examinedrnthe effects of firm specific factors (age of company, size of company, volume of capital,rnleverage ratio, liquidity ratio, growth and tangibility of assets) on profitability peroxide byrnROA. Profitability is dependent variable while age of company, size of company, volumernof capital, leverage liquidity ratio, growth and tangibility of asset~) are independentrnvariables. The sample in this study includes nine of the listed insurance companies forrnnine years (2003-2011). Secondary data obtained from the financial statements (Balancernsheet and Profit/Loss account) of insurance companies, financial publications of NBE arernanalyzed. From the regression results; growth, leverage, volume of capital, size, andrnliquidity are identified as most important determinant factors of profitability hencerngrowth, size, and volume of capita are positively related. In contrast, liquidity ratio andrnleverage ratio are negatively but significantly related with profitability. Lastly, age ofrncompany and tangibility of assets are not significantly related with profitability.

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