Abstract:
This paper examined the effects of firm specific factors (age of company, size of company,
leverage ratio, premium growth rate, liquidity ratio and tangibility of assets) on profitability
proxy by ROA. Profitability is dependent variable while age of company, size of company,
premium growth rate, leverage, liquidity ratio and tangibility of assets) are independent
variables. The sample in this study includes nine of the listed insurance companies for twelve
years (2005 to 2016). Secondary data obtained from the financial statements (Balance sheet
and Profit/Loss account) of insurance companies, financial publications of NBE are
analyzed. Panel data analyzed using Random Effect Model (REM) after testing the
appropriateness of the model with Fixed Effect Model. From the regression results; size,
premium growth rate and leverage and age are identified as most important determinant
factors of profitability hence premium growth rate and size, are positively related. In contrast
leverage and age negatively but significantly related with profitability. Lastly, liquidity and
tangibility of asset are not significantly related with profitability.
