Profitability Analysis of Insurance Companies of Pakistan

In the modern business world the economic weather changes very abruptly hence creating a lot of room for risks. Such an environment which is full of risks is in no way favorable for investors. Insurance companies are playing a pivotal role in encouraging investors to start their business even with high risk probability, by sharing a part of their risk. This risk absorbing role of insurance companies is vital in today’s economy. As with all other companies, the performance of insurance companies need to be evaluated from time to time. Performance of an insurance company can be measured using the primary data that is published in annual reports and yearbooks. The aim of this report is to analyze the performance of Pakistan’s insurance companies in terms of their profitability. Profitability will be calculated using a multiple regression model where the independent variables are the determinants like age, size, liquidity and loss ratio etc. Three life insurance and three non-life, private sector insurance companies have been selected for this purpose and their performance has been evaluated in this report.