Financial Management Perspective

Financial Management Perspective

Surveying The Effects of Claim Ratio, Operating Costs, and Retention Ratio on the Profitability of Insurance Companies

Document Type : Original Article

Authors
Mojtaba Rostami Noroozabad 1
Milad Sahrazi 2
Zhaleh Mardani 3
Haniyeh Arian Asl 4
1 Assistant Prof., Department of Financial Management, Islamic Azad University, Central Tehran Branch, Tehran, Iran
2 Ph.D in Economics, Department of Economics, University of Mazandaran, Babolsar, Iran
3 MSc. In Financial Management, Islamic Azad University, Firoozabad Branch, Firoozabad, Iran
4 MSc. In Financial Management, Islamic Azad University, Firoozabad Branch, Firoozabad, Iran.
10.48308/jfmp.2024.104192
Abstract
In this study, the relationship between the profitability of insurance companies (based on two key profitability indicators, including the return on assets (ROA) and the return on equity (ROE)) and its influencing factors, including claim ratio, operational expenses, and retention ratio, has been studied. Nineteen insurance companies listed on the Tehran Stock Exchange (TSE) and Iran Fara Bourse (IFB) were included in the research sample. A panel regression analysis was conducted using Eviews software to test hypotheses during 2016-2021. As a result of the estimation of the research models, the variable of loss ratio significantly and negatively affects the return on assets and return on equity of insurance companies listed in the Tehran Stock Exchange and Iran Farabourse. Also, operating costs have a negative and significant effect on the rate of return on assets and return on equity as profitability criteria of the sample companies. On the other hand, the holding ratio variable has had a positive and significant effect on the rate of return on assets and return on equity as profitability measures of insurance companies listed in the Tehran Stock Exchange and Iran Farabourse
Keywords
Insurance Companies
Claim Ratio
Operational Costs
Retention Ratio
Profitability
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Financial Management Perspective
Volume 13, Issue 43
2023
Pages 29-49