A panel data analysis on the determininants of profitabiltiy of life insurance firms in the Philippines for the period 2006-2015

• Main Authors: Choa, Ralph Cedrick C., Chua, Marius Edrick C., Sasil, Hanna Bianca Z., Vito, Catherine Mae B.
• Format: text
• Language: English
• Published: Animo Repository 2017
• Subjects: Life insurance > Philippines; Profit > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/8168
• Institution: De La Salle University

The purpose of this research is to identify the determinants of the profitability of life insurance companies in the Philippines by investigating the relationship of the profitability measures, two-year overall operating ratio and investment yield, against the firm-specific factors namely firm growth, firm size, leverage, liquidity, and tangibility of assets and macroeconomic factors, specifically gross domestic product (GDP) and interest rates. The researchers used a sample size of twenty-two (22) life insurance firms over the course of ten (10) years from 2006-2015. A panel data analysis was conducted to determine significant independent variables. As a result, it was determined that 8.39% of the independent variables accounted for the changes in the operating ratio. Significant variables were firm size and tangibility of assets which showed a positive and negative relationship, respectively. As for the investment yield, 5.72% of the independent variables accounted for its changes. Both firm size and tangibility of assets showed a negative significant relationship towards the profitability ratio. With these results, it can be said that firm specific factors contribute to the profitability of life insurance companies.