Ijaz Hussain



This paper uses firm level data of 39 companies of insurance industry of Pakistan for the period 2006-11. The findings of this study suggest that based on overall regression results, macroeconomic environment, equity market conditions and inflation have a positive and significant impact on profitability of insurance companies in Pakistan. This is also true for non-life insurance companies. However, significance and signs of the coefficients of firm-specific characteristics and macroeconomic variables vary across life, non-life and takaful insurance companies on account of varying nature of their clientele and coverage of insurance policies. Corporate managers of life insurance companies should especially focus on exploring opportunities for growth and diversification and management of underwriting risk and investment portfolios in view of changing equity market conditions. Financial strength, firm size and financial leverage cannot be ignored in profitability management of life insurance companies. The management of non-life insurance companies should also keep in view the macroeconomic environment, equity market conditions, inflation in addition to firm specific characteristics including financial leverage, relative firm size, financial soundness, growth opportunities, underwriting risk and diversification in particular to manage profitability. The takaful business managers should especially focus on underwriting risk, diversification and working capital management to manage their return on assets


Life Insurance, non-life, takaful, performance,profitability

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