MEASURES OF INSURANCE COMPANIES PROFITABILITY: EVIDENCE FROM INSURANCE SECTOR OF PAKISTAN

Insurance companies reveal an importance for businesses and because individuals compensate losses and put them in positions where they were before they occur. In addition, insurers provide economic and social benefits for companies such as, loss prevention and reduction of anxiety. The major objective of the study is to measure the profitability of insurance companies in Pakistan. For this purpose, a secondary data has been gathered for the period from 2009 to 2013 that have been collected from published reports of selected insurance companies, Economic Survey of Pakistan. The variables including age of company, size of company, volume of capital, leverage ratio and loss ratio) on profitability are peroxide by ROA. A key indicator of insurance companies profitability is return on assets (ROA), defined as the before tax profit divide by total assets (TA). Profitability is dependant variable while age of company, size of company, volume of capital, leverage and loss ratio) are independent variables. The findings showed that there is no relationship between profitability and age of the company and there is significantly positive association between size of the company and profitability. The result also concluded that the volume of capital is significantly and positively related to profitability. Loss ratio and leverage ratio showed negative but significant relationship with profitability. This study also gave suitable significant suggestions for the development of insurance sector in Pakistan .