Citations


Contact Us

For Marketing, Sales and Subscriptions Inquiries
2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062
USA

Conference List

The Economics and Finance Letters

December 2020, Volume 7, 2, pp 236-246

Factors Affecting Profitability of General Insurance Companies in Indonesia

Denny Maulana

,

Bambang Mulyana

Denny Maulana 1 ,

Bambang Mulyana 1 
  1. Post Graduate Program, Mercu Buana University, Indonesia. 1

Pages: 236-246

DOI: 10.18488/journal.29.2020.72.236.246

Share :

Article History:

Received: 30 July, 2020
Revised: 02 September, 2020
Accepted: 18 September, 2020
Published: 05 October, 2020


Abstract:

This research work shows the impact on profitability by Return on Assets (ROA) on capital adequacy measured by Risk Based Capital (RBC), Return on Investment (ROI) and Solvency by Debt Equity Rate (DER) measured). Then prove the RBC and ROI effect on DER, then demonstrate the RBC 's influence on ROA through DER, demonstrate the ROA impact on the general insurers reported upon on Indonesian Stok Exchange 2015-2018. The design of the research was causal research. Technical sampling using a deliberate method of sampling. During the four-year observation period, eight companies were obtained using this method that met the criteria of 14 companies. 32 samples in total. Study of linear regression model and path analysis is utilized in data analysis process. ROI has a positive and significant ROA effect, and DER has an adverse effect and important to ROA; The report's result shown that RBC has no significant ROA impact. Then RBC has an impact on DER, but ROI has a positive and important effect on DER. RBC via DER then has no significant impact on ROA, whereas ROI via DER has a positive and substantial impact on ROA. RBC has a significant negative effect on DER, and ROI has a significant and positive effect on DER. Then RBC by DER does not have a significant ROA effect, while ROI by DER has a positive and significant ROA impact. RBC then has a significant negative impact on DER, while ROI has a positive and important impact on DER.
Contribution/ Originality
This research is one of the first empirical studies to examine the profitability factors of general insurance policyholders in Indonesia. The study findings reveal these factors and their importance in terms of profitability for insurance companies.

Keywords:

Profitability, RBC, ROI, DER, ROA, Indonesia stock exchange.

Reference:

Aprilino, A. D. (2014). Analysis of the effect of solvency and underwriting on the profitability of a losses insurance company study of losses insurance companies that are listed on the Indonesia stock exchange in 2008-2012. Undergraduate Thesis, STIE PERBANAS. Retrived from: http://eprints.perbanas.ac.id/id/eprint/585 .  

Budiarjo, R. S. (2015). Influence of insurance company financial health levels on increased premium income. Yogyakarta: Faculty of Economics, Yogyakarta State University.

Elisabeth, E., & Mulyana, B. (2019). Factors that influence profitability of general insurance issuers in Indonesia. The Economics and Finance Letters, 6(1), 25-39. Available at: https://doi.org/10.18488/journal.29.2019.61.25.39.

Ghozali. (2011). Application of multivariate analysis with SPSS program. Semarang: Diponegoro University Publisher Agency.

Horne, V. J., & John, M. W. (2005). Principles of financial management fundamental of financial management. Issue 12. Translated by dewi fitriasari. Jakarta: Salemba Empat.

Khasmir. (2013). Analysis of financial statements (6th ed.). Jakarta: Rajawali Press.

Leviany, T., & Wiwin, S. (2014). The effect of risk-based capital on profitability in life insurance companies. Journal of Accounting Research, 6(1), 1-12. Available at: https://doi.org/10.17509/jaset.v6i1.8993.

Mulyadi. (2001). Management accounting (3 ed.). Jakarta: Four Salemba.

Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 574-592. Available at: https://doi.org/10.1111/j.1540-6261.1984.tb03646.x.

Ningrum. (2014). Analysis of factors affecting the return on equity in general insurance. Undergraduate Thesis, Fakultas Ekonomika dan Bisnis. Retrieved from: http://eprints.undip.ac.id/43619 .  

Prayitno, D. (2010). Understand statistical data analysis with SPSS. Yogyakarta: MediaKom.

Rahayu, D., & Mubarok, N. (2017). The effect of risk based capital on the profitability of Sharia insurance companies. I-Economic Journal, 3(2), 189-208. Available at: https://doi.org/10.19109/ieconomics.v3i2.1455.

Sastri, I. A. I. P., SE Edy, S., & NI Kadek, S. (2017). Effect of premium income, underwriting results, investment results and risk based capital against the profit of insurance companies. E-.Journal Vol.7 No.1 Ganesha Education University 2017. Retrieved from: https://ejournal.undiksha.ac.id/index.php/S1ak/article/view/9409.

Sukirno Sadono. (2008). Introduction to microeconomics theory. Jakarta: PT Raja Grafindo Persada.

Sutrisno. (2001). Financial management theories, concepts and applications (1st ed.). Yogyakarta: Second Matter, Econisia.

Ullah, G., Faisal, M. N., & Zuhra, S. T. (2016). Factors determining profitability of the insurance industry of Bangladesh. International Finance and Banking, 3(2), 138-147. Available at: https://doi.org/10.5296/ifb.v3i2.9954.

Statistics:

Google Scholor ideas Microsoft Academic Search bing Google Scholor

Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:

All authors contributed equally to the conception and design of the study.

Related Article

( 1 ) External Factors Influencing on Industrial Building System (Ibs) in Malaysia
( 2 ) A Study of Transnational and Transformation Leadership Styles and Factors Affect The Leadership Style
( 3 ) A Theoretical Review on Critical Success Factors (CSFS) of Entrepreneurship Programs in Community College
( 4 ) Factors Impacting on SMEs Internationalization: Dairy Industry in Zimbabwe
( 5 ) The Effect of Personal Factors on the Customer Rating of the Quality of Services of the Islamic Banks Operating in the Syrian Coast
( 6 ) A Factor Analysis Approach Towards a Study of the Factors Affecting Students’ Choice of Higher Education Institution: A Case Study of a Private Institution (Twintech International University College of Technology)
( 7 ) Analyzing Factors Affecting the Success of Social Media Posts for B2b Networks: A Fractional-Factorial Design Approach
( 8 ) Effect of Institutional Factors on Foreign Direct Investment in Nigeria
( 9 ) The Effect of Internal and External Factors of Companies on Profitability and its Implications on Stock Price Index of State-Owned Banks
( 10 ) Factors that Influence Profitability of General Insurance Issuers in Indonesia
( 11 ) Factors Influencing Human Capital in Ready Made Garments Industry in Bangladesh
( 12 ) Analysis of the Effects of Pull and Push Factors on Brain Drain: An Example of Turkey
( 13 ) Analysis of Environmental Factors Affecting Manufacturing Small and Medium-Size Enterprises in Kogi State Nigeria
( 14 ) The Effect of Selected Factors on Tax Revenue Mobilization in Ethiopia: The Case of Amhara Region
( 15 ) Factors Affecting the Individual Stock Price Index (IHSI) Industrial Manufacturing Sector in Indonesia, Automotive Sub Sectors, and Components in Indonesia Stock Exchange (IDX)
( 16 ) Factors Influencing on Human Resources Development in SMEs Service Enterprises in Industry 4.0: The Case of Thai Nguyen Province, Vietnam
( 17 ) Factors Affecting the Capital Structure of the Textile Industry in Bangladesh: An Inferential Study
( 18 ) Factors Influencing Audit Expense and Quality in an Emerging Economy: A Study on Bangladesh
( 19 ) The Effect of Disruptive Factors on Inventory Control as a Mediator and Organizational Performance in Health Department of Punjab, Pakistan
( 20 ) Factors Influencing Farmers’ Adoption of Soil Conservation Development
( 21 ) Factors Affecting Profitability of General Insurance Companies in Indonesia
( 22 ) Exploring the Dimensions Using Exploratory Factor Analysis of Disruptive Factors and Inventory Control
( 23 ) Analysis of Demographic Factors on Perceptions of Inventory Managers towards Healthcare Performance
( 30 ) The Effect of Selected Financial Ratios on Profitability: An Empirical Analysis of Listed Firms of Cement Sector in Saudi Arabia
( 31 ) Market Share and Profitability Relationship: A Study of the Banking Sector in Nigeria
( 32 ) The Profitability of Momentum Strategies: Empirical Evidence from Damascus Securities Exchange (DSE)
( 34 ) Profitability of Commercial Bank on Interest Rate Deregulation
( 36 ) Determinants of Banks Profitability & Liquidity and the Role of BASEL III in Islamic & Conventional Banking Sector of Pakistan: A Case Study of NBP
( 37 ) Profitability Behavior of Plastic Industries in Indonesia
( 38 ) Analysis of Effect of Profitability, Capital, Risk Financing, the Sharia Supervisory Board and Capabilities Zakat in Islamic Perspective with Circular Approach Causastion on Islamic Banks in Indonesia
( 39 ) Does Capital Structure Affect the Profitability of Listed Family and Non-Family Firms? Evidence from Bangladesh
( 40 ) Determinants of Profitability and its Implications on Corporate Values (Studies at Ceramic, Porcelain and Glass Sub Sector Listed in Indonesia Stock Exchange, 2009 - 2018)
( 41 ) Testing the Validity of Gibrats Law in the Context of Profitability and Leverage
( 42 ) The Effect of Capital Structure Decisions on Profitability of Quoted Consumer Goods in Nigeria
( 43 ) Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry
( 45 ) Estimating Value at Risk for Sukuk Market Using Generalized Auto Regressive Conditional Heteroskedasticity Models
( 46 ) Development, Preference Change, and Inequality in an Integrated Walrasian-General-Equilibrium and Neoclassical-Growth Theory
( 50 ) Fraud Auditing Law Implications in the Case of Jiwasraya Insurance in Indonesia
( 52 ) Promoting Local Acceptability of International Oil Companies (IOCS) Through Corporate Social Responsibility (CSR): The Case of Tullow Oil in Ghana
( 53 ) Share Options, Share Award and Firm’s Performance: Evidence from Malaysian Public Listed Companies
( 54 ) The Impact of the Global Financial Crisis on the Debt, Liquidity, Growth, and Volume of Companies in Palestine Stock Exchange