A study on the effects of firm size on the growth and profitability of selected 27 non-life insurance companies for the period 2001-2005

• Main Authors: Lechuga, Maria Amor, Narsolis, John Joseph Alejandro V., Que, Princess, Roman, John Ian
• Format: text
• Language: English
• Published: Animo Repository 2007
• Subjects: Insurance companies > Philippines; Insurance companies; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14318
• Institution: De La Salle University

According to the report of Standard & Poor's, an international credit rating institution, the non-life insurance industry in the Philippine is performing poorly due to the companies' weak capitalization and excessive taxation. With that, there is then a need to strengthen and develop the financials of non-life insurance companies. In the financial intermediation industry today, banks merge in order to improve their financial stability and profitability. The researchers then hypothesized whether the size of a firm would be a significant indicator of growth and profitability for non-life insurance companies. This paper shows the relationship of firm size, growth and profitability of twenty-seven (27) selected non-life insurance companies and a separate study on one (1) merged non-life insurance company for the years 2001-2005. Using panel data regression, the results state that net premiums earned and net income of non-life insurance companies were the only variables that are significantly affected by the size of the firm. With the results generated from this study, the researchers recommend the non-life insurance industry to focus not only on managing the size of the firm but also on their operations in order to reduce costs and improve the bottom-line figures and develop the growth and profitability of non-life insurance companies.