Babilathenna, B. M. K. K.Sudasinghe, S. L.2025-05-152025Babilathenna, B. M. K. K., & Sudasinghe, S. L. (2025). The Firm Specific Internal Factors Affecting Financial Performance of Life Insurance. 13th Students’ Research Symposium 2023/2024. Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka.http://repository.kln.ac.lk/handle/123456789/29153Introduction: This study investigates the financial intricacies of Sri Lanka’s life insurance industry by examining how premium income, claim expenses, and investment returns impact net income. These internal factors are pivotal in shaping financial performance, making them essential for insurers striving to optimize profitability. By uncovering the interplay between these variables, this research aims to illuminate strategies for navigating the sector’s financial challenges. Methodology: The analysis focused on six life insurance companies listed with the Insurance Regulatory Commission of Sri Lanka (IRCSL) that provided complete financial disclosures from 2012 to 2022. These firms were selected using purposive sampling, ensuring relevance and data quality. A panel data regression model, processed with the STATA application, was utilized to evaluate the relationships between premium income, claim expenses, and investment returns. This rigorous approach provided nuanced insights into their influence on net income. Findings: The findings revealed a complex dynamic among the three variables. Investment returns emerged as the most significant driver, positively influencing net income and highlighting their vital role in financial stability. Surprisingly, premium income exhibited a significant negative impact, suggesting inefficiencies in managing these inflows, possibly due to higher associated costs or misaligned operational strategies. Claim expenses, while not statistically significant at the 5% level, displayed a negative impact at the 10% level, underscoring their potential to strain financial resources subtly. Conclusion: This study underscores the challenges facing Sri Lanka’s life insurers. While premium collection remains a priority, inefficiencies in its management can erode profitability. Simultaneously, claim expenses demand careful oversight to mitigate latent financial risks. The key to overcoming these hurdles lies in enhancing investment strategies and adopting robust risk management frameworks. These findings enrich the existing body of knowledge and provide actionable insights for stakeholders in the life insurance sector.Premium incomeclaim expensesinvestment returnsnet incomeArticle