DETERMINANTS OF ANALYSIS OF PROFITABILITY OF INSURANCE BUSINESS IN ETHIOPIA

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