IMPACT OF UNDERWRITING AND FINANCIAL RATIOS ON PROFITABILITY: AN EMPIRICAL ANALYSIS OF INSURANCE FIRMS

Abstract

This study examines factors influencing profitability in the insurance sector, focusing on financial indicators such as Return on Assets (ROA), Return on Equity (ROE), Asset Liability Ratio (ALR), Claims Ratio (CR), Expense Ratio (ER), Leverage (LEV), and Total Premium Earned (TPE). Using correlation analysis, unit root tests, and regression models, it evaluates their impact on financial performance. The results show that TPE positively affects ROA and ROE, highlighting the importance of premium growth. In contrast, CR, ER, and LEV negatively influence profitability, emphasizing the need for cost control and efficient claims management. The Augmented Dickey-Fuller test confirms data stationary, supporting regression analysis. The fixed effects model provides the best explanatory power. The study recommends prioritizing claims management, expense control, and premium growth strategies to enhance profitability. Future research should explore the long-term effects of leverage and asset-liability management, as well as alternative risk management approaches.