Profitability determinants of non-life insurance companies in Serbia

Taking into account the specifics of the Serbian insurance market, the insurance sector in Serbia is still underdeveloped and, if we take the degree of development into account, it is well below the average for European Union member states. The insurance market in Serbia is developing and has great potential opportunities. Profitability is one of the most important goals of financial management. The aim of this research is to examine the impact of internal factors of non-life insurance business operations such as: asset size (company), asset growth, premium growth, liquidity ratio, debt ratio, underwriting risk, operating costs, financial leverage, and total revenues of the profitability of non-life insurance companies in Serbia. The results of the research were obtained using the multilinear regression model, where the representativeness of the model was tested by calculating the coefficient of correlation, the determination coefficient and the corrected determination coefficient. Also, a variance analysis (ANOVA) was carried out, in order to test the significance of the observed variables in the model and examine the impact of these independent variables on ROA profitability as a dependent variable. The fundamental results are placed on giving an empirical basis for reaching the conclusion that the greatest impact on the profitability of non-life insurance companies is exerted by the increase in premiums, the debt ratio, operating costs and the share of profit in total revenues.