| Abstract [eng] |
The main purpose of this master thesis is to identify factors determining the profitability of Baltics non-life insurance market by collecting literature about non-life insurance, determining factors affecting non-life insurance from scientific sources, by building methodology for research and evaluating variables that impacts non-life insurance profitability in Baltic countries. The work consists of three main parts; the analysis of literature, the research and its results, conclusion and recommendations. Literature analysis reviews the theory of non-life insurance specifics, used measures for profitability and factors affecting profitability. Most often ROA and ROE is used to evaluate profitability of non-life insurance and factors affecting it: inflation, GDP growth, interest rate, company size, growth of gross written premiums, gross loss ratio, company age and financial leverage. After the literature analysis the author has carried out the linear regression analysis using “R Studio“ by creating two equations. Where in one equation dependent variable is ROA and independent variables are inflation, GDP growth, interest rate, company size, growth of gross written premiums, gross loss ratio, company age and financial leverage, and in another equation dependent variable is ROE and independent variables the same as mentioned in first equation. Performed research revealed that inflation, GDP, interest rates and financial leverage size does not have impact on ROA and ROE of Baltics non-life insurance companies; company size, growth of gross written premiums, gross loss ratio, company age does have impact on ROA and ROE of Baltics non-life insurance companies. If company size increase by 1%, profitability could increase from 0.02% till 0.06%; if growth of gross written premiums increase by 1% , profitability could decrease from 0.05% till 0.15%; if gross loss ratio increase by 1%, profitability could decrease from 0.09% till 0.26%; if company ages 1 year, profitability could increase from 0.0005% till 0.0013%. The conclusions and recommendations summarize the main concepts of literature analysis as well as the results of the performed research. The author believes that the results of the study could give insights to the non-life insurance companies that aim to increase profitability. |
