IMPACT OF INTERNAL (MICRO) AND EXTERNAL (MACRO) FACTORS ON PROFITABILITY OF INSURANCE COMPANIES

The research is conducted to analyze the impact of internal and external factors on the profitability of insurance companies by taking into consideration three measures of profitability of insurers that are overall profit (ROA), Underwriting Profit (UP), and Investment Income (INI). Panel data regression is used for analysis of life insurance companies in Pakistan for a period of 2006-2016. The findings of the study elucidate that Gross written premium, Expense on management, Size, and Interest rate have a significant impact on the profitability of insurance companies. The results show the underwriting losses that have been incurred by life insurance companies, emphasized the need of separate and actuary departments for proper validation of the policies. The paper facilitates the risk managers and regulatory authorities by depicting the factors affecting the performance of insurance sector. The research helps the management and policy makers in expediting the growth and performance of insurance sector.