Determinants of Profitability in the Zimbabwean Insurance Industry from 2009-2017

Abstract – This study sought to evaluate the determinants of Zimbabwe Insurance Industry`s performance from 2009-2017. During the period under review, Zimbabwe was operating with a stable currency regime. The study used return on equity (ROE) as a proxy of profitability. A combination of firm specific factors and macroeconomic factors were considered in the regression model to ascertain their impact on profitability. Panel data for 8 life assurance companies was subjected to Multiple Regression using e-views 8 statistical package. A Random Effects model was adopted and the results imply that firm specific variables; expense ratio and equity capital are significantly and positively related to profitability. Findings further registered a positive relationship between GDP growth and profitability. A negative relationship was registered between ROE and inflation rate.

Keywords: ROE, Firm specific factors, Macroeconomic factors, Random Effects

[Cite as: Chinorwadza, T., Mutandagai, V. M., and Mutonhori, T. (2020). Determinants of Profitability in the Zimbabwean Insurance Industry from 2009-2017. Diverse Journal of Multidisciplinary Research, Vol. 2, Issue 6, Pages 1-9.]