Financial Performance Analysis of Insurance Companies in Nepal

Abstract

This study examined the financial performance of Nepalese insurance companies. The dependent variables was return on assets and return on equity while independent variables includecurrent ratio Debt equity ratio operating expenses ratio and cashflow ratio.The study design was descriptive and analytical research design. The data were collected from insurance and financial statistics published by BeemaSamiti and annual reports of the selected Nepalese insurance companies. The mean, Standard Deviationmaximum, minimum, vertical analysis,correlation coefficient and regression models were estimated to analyzethe secondary data of this study. This study examined a financial performance of lifeinsurancecompanies over the period 2072/73 to 2076/77.The finding of the study over showed that CFOR is positive relation with financial performance (ROA and ROE) but negative relation with CR, DER and OER.Manager should balancebetween profitability and liquidity of their companies.This means they should maintain a tradeoff between profitability and liquidity. Profitability plays an important role in financial position companies. Keywords: Current ratio, Debt equity ratio, operating expenses ratio, Cashflow ratio, return on assets and return on equity.