FINANCIAL PERFORMANCE ANALYSIS OF NEPALESE NON-LIFE INSURANCE INDUSTRY

Abstract

This study investigates the financial performance analysis of Nepalese non-life insurance industry. This study has employed descriptive and casual comparative research design. This study used secondary data sources gathered from insurance companies of Nepal for ten year periods (2013/14-2022/23). This study used descriptive analysis, correlation analysis and multiple regression analysis by using SPSS. The result reveals that the age of companies, liquidity, leverage, premium growth and size of the companies are important factors affecting the financial performance of insurance companies in Nepal. The correlation analysis shows that age of the companies and liquidity ratio have significant negative relation with financial performance (ROA and ROE) of sample insurance companies in Nepal. Then, leverage has significant positive relationship with ROA and ROE. The correlation analysis also shows that premium growth has significant positive correlation with ROA and it has insignificant positive relation with ROE. Moreover, the size of companies has significant negative relationship with financial performance (ROA and ROE) of insurance companies in Nepal. The study also shows that age of companies and liquidity ratio has significant positive impact on financial performance (ROA and ROE) of insurance companies. Then, leverage ratio has insignificant negative impact on ROA and insignificant positive impact on ROE of insurance companies. In addition, premium growth has insignificant positive impact on financial performance (ROA and ROE) of insurance companies in Nepal. Moreover, size of companies has insignificant negative effect on financial performance (ROA and ROE) of insurance companies in Nepal. Hence, it can be concluded that age of companies and liquidity are the key factors of financial performance of insurance companies in Nepal.