An Empirical Study on Determinants of Business Performance of Korean Non-life Insurance Companies (Focused on ROA)
- Sang Youl Kim
- Sang-Bum Park
AbstractThis study examines the total asset profitability, which is an indicator of business performance, using panel data for 10 years from 2005 to 2015 for 10 domestic insurance companies. We analyze the factors affecting the ROA, compare the differences between before and after the enactment of the Capital Market Act, and assess the level of total assets of domestic insurance companies. Total Asset Margins As a result of analyzing the eight independent variables in order to identify the factors that affect the dependent variable, the factors affecting the total asset margins are (4) investment operating profit, insurance operating profit, business expense, appear. Among them, investment profits were the most influential factors. On the other hand, the factors affecting (-) the total asset profitability were analyzed as total capital, premium, leverage, and loss ratio. In particular, the total amount of capital has the largest negative impact on total assets. As a result of analyzing whether or not the total assets profit rate before and after enforcement of the Capital Market Act is the same, ROA, leverage, and period of operation were found to be the same before and after the Capital Market Act. On the other hand, insurance premiums, insurance operating profits, investment operating profits, business expenses, loss ratios, and total capital were analyzed before and after the implementation of the Capital Market Act. According to the results of the analysis of the total assets profit rate and the amount of the premium insurance, the second group has a 0.4% lower ROA than the first group but the third group is 41.8% lower than the first group. In other words, it can be seen that the ratio of total assets is lower than that of large companies.
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- Michael ZhangEditorial Assistant