ICBI 2024 - Full Papers
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Item An Empirical Analysis of The Firm-Specific Internal Factors on the Profits of Insurance Companies in Sri Lanka(Faculty of Commerce and Management Studies University of Kelaniya., 2024-11-11) Hansini, W.W.; Sudasinghe, S. L.; Fernando J.A.H.P.The insurance sector plays an important role in the national economy, managing risks and providing financial security. The goal of every company is to achieve optimal profit. Profits are important to investors and management as sources of dividend payments and growth. For insurers and regulators, profits provide additional protection against insolvency. Therefore, companies must identify the factors that affect their profits. This study investigates the impact of premium income, claim expenses, risk-based capital, underwriting results, and investment return on the profit of life and general insurance companies in Sri Lanka. The study sample consists of all life and general insurance companies in Sri Lanka from 2016 to 2022. A quantitative approach is used for this study. Independent variables include premium income, claims expenses, risk-based capital, investment returns, and underwriting results. Profit is considered the dependent variable in the regression model. Descriptive analysis, correlation analysis, and panel data regression are used to analyze the data in this study. As a result, the profit margin of insurance businesses in Sri Lanka would be greatly impacted by premium income, claims expenses, risk-based capital, investment return, and underwriting performance. The regression results could not reject every null hypothesis for the life and general insurance industry. More specifically, neither model rejected the null hypothesis that claimed that profit is not much impacted by risk-based capital and investment return. The analysis showed that underwriting outcomes, claims costs and premium income significantly affect profit.