Abstract:
The main objective of this study was to investigate the determinants of profitability of insurance
business in Ethiopia. Only secondary source of data was used for this study purposes. This study
applied purposive (non-probability) sampling technique. To analyze the collected secondary data,
the researcher used both descriptive and inferential statistical analysis techniques. The
researcher used the Statistical Package for Social Science to analyze the data. The correlation
result of this study indicated that reinsurance dependence, solvency ratio, premium growth,
company size, growth rate of GDP of this study were positively correlated with profitability of
insurance company in Ethiopia but under writing risk, inflation rate and interest rate were
negatively correlated with profitability of insurance company in Ethiopia. Based on the findings
of this study, the premium growth and gross domestic product have highest impact on the
profitability of the insurance company in Ethiopia. Out of the independent variables, solvency
ratio and company size have the lowest impact on the profitability of the insurance company in
Ethiopia. The finding of this study showed that reinsurance dependence and company size have
no significant effect on profitability of the insurance company of Ethiopia. But inflation rate and
interest rate have significant effect on profitability of the insurance company of Ethiopia.
