Abstract:
Profitability of insurances is vital for sustained growth of national economies. Profitability let
insurances stimulate and feed investments; have strong financial position and sustainable
business. Therefore, the general purpose of this study were investigate determinants of factors on
the profitability of insurances in Ethiopia by using panel data of 17 insurances company from
year 2013 to 2019. The study were quantitative research approach and secondary financial data
were analyzed by using multiple linear regressions models. This study examined the determinants
of profitability on general insurance companies of Ethiopia proxies by ROA. Profitability is
dependent variable while AGE, tangibility of asset, size, leverage, growth, liquidity, adequate
capital, GDP per capital and inflation are independent variables. In this paper, econometric
analyses were performed for a panel of 17 Ethiopian general insurance companies for the study
period of 2013-2019. The result proves that with the increase in leverage negatively affects the
performance of Ethiopian insurance industry and highly leveraged companies are less profitable.
Managers of insurance companies must work to achieve the optimal capital structure level to maximize
the firm‘s profitability.
