Micro-Level Determinants and Profitability of the Licensed Long- Term Insurance Companies in Sri Lanka

Abstract

Abstract: With the drastic changes happening in the corporate sector, the relevance of insurance companies gradually grows. They are essential to the country's development and make major contributions. Therefore, the goal of this study is to pinpoint the micro-level factors that influence the financial success of Sri Lankan insurance companies. Return on Assets and five independent factors, including reinsurance dependence, commission ratio, reinsurance premium ratio, leverage ratio, and firm size, are used to assess financial performance. Out of the twenty-eight insurance companies that were accessible for this study from 2013 to 2019, eight long-term licensed insurance companies were chosen at random as the sample. Secondary information is needed and is acquired through annual reports from each company and the IBSL (Insurance Board of Sri Lanka). Multiple regression analysis and descriptive statistics are the statistical methods used in this investigation. Only reinsurance dependence, according to the study, exhibits a statistically significant positive influence on return on assets. Return on assets is statistically significantly impacted negatively by commission ratio, reinsurance premium ratio, debt, and company size. Keywords : Insurance, Micro level, Reinsurance, Return on Asset