Factors Affecting Financial Performance of Insurance Companies Operating in Hawassa City Administration, Ethiopia

The objective of this study was to investigate the factors affecting financial performance of insurance companies operating in Hawassa city Administration, Ethiopia. In this study, the researchers have employed causal research design with mixed research approach due to quantitative nature of data required to prepare the report of this study. The target population of the study was 17 general insurance companies operating in, Ethiopia. Out of all seventeen insurance companies in the city, the researchers selected six general insurance companies that have 10 year audited financial statements from 2008 to 2018. The secondary data were collected by reviewing of financial statements and related published and unpublished materials to achieve the objective of this study. Ordinary least square model has employed by the researchers to analysis the data through SPSS version 20.0. Then, the result of this study showed that out of eight (8) explanatory variables incorporated in the model, five (5) variables such as underwriting, premium growth, solvency ratio, growth rate of GDP, and inflation rate have significant effect on financial performance of the insurance companies operating in Hawassa city Administration. Whereas, the reinsurance dependence, company size and interest rate have no significant effect on financial performance of the insurance company of Hawassa city Administration. Finally, the findings of the study may inform policymakers about factors affecting performance of insurance companies operating in the city in particular and in Ethiopia in general, supports to formulate constructive policy to enhance financial performance goal of the insurance firms in one hand and to promote the economic development of the country in other hand.