Determinants of the Solvency of Life Insurance Companies in Nepal

Abstract

ABSTRACT The objectives of study are to examine the current status factors determining solvency of life insurance companies in Nepal, to examine the relationship between leverage, investment, liquidity, claim ratio, profitability, inflation, firm’s size and solvency of Nepalese life insurance companies and To analyze the impact of leverage, investment, liquidity, claim ratio, profitability, inflation, firm’s size to the solvency of Nepalese life insurance companies. The independent variables of research are leverage, investment, liquidity, claim ratio, profitability, inflation and firm’s size. The dependent variables of research are solvency ratio. The research conducted using the descriptive and casual comparative research design. The sample of the research five life insurance companies on the basis of the availability of the data for previous ten years. Population are all the insurance companies running in Nepal. The research conducted financial analysis or called descriptive analysis for achievement of the result of objectives one. The objective second and third are find out from the statistical analysis of correlation and regression analysis. The finding of the research are the minimum, maximum, mean and standard deviation of the given table shows the different in the minimum and maximum. The high different in the mean and minimum and maximum. The standard deviation also seem high. On the basis of the given truth the current status of the given each of the variables are fluctuating in nature. The relationship of leverage and firm size is significant to the solvency ratio and investment, liquidity, claim ratio and profitability is not significant relationship to the solvency ratio. The impact of the leverage and claim ratio have significant to the solvency ratio. The impact of investment, liquidity, profitability, firm size and inflation rate have not significant impact to the solvency ratio. Keywords: Solvency, Investment, Liquidity, Profitability, Firm Size and Inflation, Leverage and Claim Ratio