International Journal of Finance, Insurance and Risk Management ISSN: 2047-0916

The Importance of Internal and External Factors in Defining the Profitability of UK Insurance Companies

Hany A. Saleh, Abdelkader Derbali
International Journal of Finance, Insurance and Risk Management, Volume 10, Issue 4, 25-39, 2020
DOI: 10.35808/ijfirm/230

Abstract:

Purpose: The purpose of this paper is to examine empirically the influence of internal and external factors on the performance of UK insurance enterprises. Design/Methodology/Approach: To do so, we use a sample composed of 20 insurance enterprises during the period from 2000 to 2018. We employ the panel data estimation to capture the impact of internal and external factors on the performance of UK insurance enterprises. We use two measures of performance such as, ROA and ROE. Findings: Our results show that the size of firm, liquidity, GDP, CPI and WTI have a positive and significant effect on the performance of UK insurance enterprises. But, we find that leverage, asset turnover and interest rate present negative and considerable impact on the profitability of UK insurance enterprises. Practical Implications: The findings of our paper can be considered as a beneficial for insurance enterprises, directors, representatives, and shareholders in making decision and improving the profitability of their organizations. Originality/value: The significant extension of our study is the using of a panel data to examine the effect of internal and external factors on the performance of UK insurance enterprises by employing two measures of performance such as ROA and ROE.


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