ISSN: 2225-8329
Open access
Companies in the insurance industry are significant actors in the service economy, and their services are increasingly being integrated into the broader financial sector. In both developed and emerging countries, the insurance industry is critical to the service-based economy’s success. In Malaysia, the severe competition in a non-life segment, the expanding market share of private insurance companies, and the increasing amount of risks retained by insurers have all had an impact on their performance in recent years. Consequently, this study examines internal factors, namely leverage, premium growth, and firm size, towards the profitability of the selected insurance companies in Malaysia. Yearly-basis data between 2014 to 2021 have been taken from public annual reports from 15 out of the 22 general-insurance companies in Malaysia. To estimate the factors involved, the observations were analysed using the Pooled Ordinary Least Square Regression Model. The sources of these data have been mainly obtained from DataStream. The findings have suggested that leverage has a significant and negative relationship with profitability, while premium growth and firm size have a substantial and positive association with the firm’s profitability. In addition, the findings appear to indicate that the management of their overall assets is highly productive, reducing the use of leverage, expanding the size of the firms, increasing premium growth, and controlling underwriting risks are the prerequisites and attributes for achieving high-profitability performance.
Arintoko, Ahmad, A. A., & Habibah, S. N. (2021). Market structure and determinants of firm profitability on general insurance industry in Indonesia. In Studies in Business and Economics (Vol. 16, Issue 1, pp. 26–41). https://doi.org/10.2478/sbe-2021-0003
Banerjee, R., & Majumdar, S. (2018). Impact of firm specific and macroeconomic factors on financial performance of the UAE insurance sector. Global Business and Economics Review, 20(2), 248–261.
Burca, A.-M., & Batrinca, G. (2014). The determinants of financial performance in the Romanian insurance market. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1), 299–308. https://doi.org/10.6007/ijarafms/v4-i1/637
Durrah, O., Abdul Rahman, A. A., Jamil, S. A., & Ghafeer, N. A. (2016). Exploring the relationship between liquidity ratios and indicators of financial performance: An analytical study on food industrial companies listed in Amman Bursa. International Journal of Economics and Financial Issues, 6(2), 435–441.
Jibran, Q. M. A., Sameen, M., Kashif, A., & Nouman, K. (2016). Determinants that affect the profitability of non-life insurance companies: Evidence from Pakistan. Research Journal of Recent Sciences, 5(4), 6–11.
Komrattanapanya, P., & Suntrauk, P. (2013). Factors influencing dividend payout in Thailand: A Tobit regression analysis. International Journal of Accounting and Financial Reporting, 3(2), 255–268. https://doi.org/10.5296/ijafr.v3i2.4443
Kripa, D., & Ajasllari, D. (2016). Factors affecting the profitability of insurance companies in Albania. European Journal of Multidisciplinary Studies, 1(1), 352–360.
Kulustayeva, A., Jondelbayeva, A., Nurmagambetova, A., Dossayeva, A., & Bikteubayeva, A. (2020). Financial data reporting analysis of the factors influencing on profitability for insurance companies. Entrepreneurship and Sustainability Issues, 7(3), 2394–2406. https://doi.org/2020 Volume 7 Number 3 (March)
http://doi.org/10.9770/jesi.2020.7.3(62)
Mazviona, B. W., Dube, M., & Sakahuhwa, T. (2017). An analysis of factors affecting the performance of insurance companies in Zimbabwe. Journal of Finance and Investment Analysis, 6(1), 11–30.
Said, M. N. H., Abdull Rahman, N. L., Abd Mutalib, H., Badri, N. S., & Shah. (2021). Profitability performance analysis on Malaysian hotel industry during COVID-19 pandemic. Journal of Academia, 9(2), 84–92.
Ondigi, A., & Willy, M. (2016). Factors affecting profitability of insurance firms: Case of firms listed on Nairobi Securities Exchange. International Journal of Economics, Commerce and Management, 4(9), 286–298.
Ortynski, K. (2016). Determinants of profitability of general insurance companies performance in Poland. Central European Review of Economics & Finance, 12(2), 53–66.
Srbinoski, B., Poposki, K., & ?ibej, G. (2021). An empirical investigation of determinants of life insurers’ performance: Evidence from selected countries in Central, Eastern, and Southeastern Europe (CESEE). Risk Management and Insurance Review, Risk Manag. Insur. Rev. https://doi.org/10.1111/rmir.12190
Tegegn, M., Sera, L., & Merra, T. M. (2020). Factors affecting profitability of insurance companies in Ethiopia: Panel evidence. International Journal of Commerce and Finance, 6(1), 1–14.
Teklit, A. B., & Jasmindeep, K. (2017). Determinants of insurance companies’ profitability: Analysis of insurance sector in Ethiopia. International Journal of Research in Finance and Marketing, 7(4), 124–137. http://euroasiapub.org/current.php
In-Text Citation: (Salleh et al., 2023)
To Cite this Article: Salleh, W. A., Manaf, S. M. A., & Hassan, M. H. A. (2023). The Analysis of Leverage, Premium Growth, and Firm Size towards the Profitability of Selected Malaysian General-Insurance Companies. International Journal of Academic Research in Accounting Finance and Management Sciences, 13(1), 1–10.
Copyright: © 2023 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode