The evolution and determinants of accepted in Tehran stock exchange insurance companies’ Profitability: A DEA-based perspective

Babaei, S.; Rostami Mal Khalifeh, M.; Heidari, M.

doi:10.22056/ijir.2024.01.05

Document Type : Original Research Paper

Authors

¹ Department of Economics, Faculty of Management and Economics, Science and Research Unit, Islamic Azad University, Tehran, Iran

² Department of Mathematics and Computer Science, Faculty of Convergent Sciences and Technologies, Science and Research Unit, Islamic Azad University, Tehran, Iran

³ Department of Management Education, Faculty of Management and Economics, North Tehran Branch, Islamic Azad University, Tehran, Iran

https://doi.org/10.22056/ijir.2024.01.05

Abstract

BACKGROUND AND OBJECTIVES: Profitability is a crucial indicator of insurance company performance, as it reflects their ability to invest and grow. Supervisors also rely on financial characteristics, including profitability, to determine the viability of insurers. The data envelopment analysis (DEA) method has been widely used to evaluate the performance of insurance companies. However, conventional financial ratios are often lacking in such studies, making DEA an effective alternative for measuring profitability. Given the rapid growth of the insurance industry in Iran, this research aims to examine the profitability of non-life insurance companies in Iran and expand coverage analysis.
METHODS: The study focuses on 18 insurance companies listed on the Tehran Stock Exchange from 2013 to 2014, with complete and available information during the research period. Profitability is measured using DEA, and the Tobit estimator model is used to investigate the impact of company size, company age, and product variety on profitability.
FINDINGS: The results highlight the importance of properly managing expenses and incomes for insurers. Additionally, the study finds that company size, company age, and product variety do not have a significant relationship with profitability.
CONCLUSION: Insurance companies need to effectively organize their expenses and various types of business to maximize profit ratios. Optimizing cost structures and diversifying business ventures are key strategies for achieving profitability. This research provides insights into insurance company performance, allowing for a better understanding of their relative profitability within the industry and the formulation of targeted strategies. It also aids the government in developing policies that support the industry's growth.

Keywords

Main Subjects

Economics of finance / insurance

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Iranian Journal of Insurance Research

The evolution and determinants of accepted in Tehran stock exchange insurance companies’ Profitability: A DEA-based perspective

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Volume 13, Issue 1 - Serial Number 47
November 2024
Pages 61-70

The evolution and determinants of accepted in Tehran stock exchange insurance companies’ Profitability: A DEA-based perspective

References

References

Letters to Editor

Send comment about this article

Volume 13, Issue 1 - Serial Number 47November 2024Pages 61-70

Volume 13, Issue 1 - Serial Number 47
November 2024
Pages 61-70