ANALYSIS OF PROFITABILITY PERFORMANCE OF NON-LIFE INSURANCE SECTOR WITH MULTIPLE LINEAR REGRESSION METHODS USING FINANCIAL RATIOS AND MACROECONOMIC VARIABLES

Abstract

People have learned how to be protected because of the risks that they face during their lives or because of the risks arising from human behavior and have tried to determine what needs to be done about it. From the past to the present, these experiences have been in the form of making personal savings or coming together to form a fund and establishing a foundation. Insurance is of great importance for social and economic life. Insurance functions have become even more valuable for people, companies and economic units in general. Insurance protects persons and assets against risks. The insurance sector, especially in developed countries, has an important place in the finance sector as it provides an important source of savings with the generated premiums and provides funds to the capital markets. The purpose of this study is to determine whether there is a relationship between non-life insurance sector's premium income obtained between 2002-2017 period and return on equity, return on assets, capital structure, firm size and macroeconomic indicators such as exchange rate - growth rate – inflation, to investigate the effects on the return on equity of the sector if such a relationship exists. There for, the annual data of the non-life insurance sector for the period 2002-2017 and the data obtained from the non-life insurance sector consolidated balance sheets for the period of 2002-2017 were used in this study. In this study, 3 different dependent variables such as return on equity, net profit \ premium income and premium income \ total assets are used, and 6 different independent variable sets, which are financial ratios and macroeconomic indicators, are used depending on each dependent variable. Multiple linear regression analysis was used as the method. When the results of the multiple linear regression analysis for the non-life insurance sector were analyzed, the results of the asset profitability were found to be significant in all models subject to the research and it was found to have a positive effect on the sector.