THE FACTORS INFLUENCING SOLVENCY RATIO OF INSURERS IN THE EUROPEAN COUNTRIES

Özet

This paper analyzes the impacts of selected financial variables on the solvency values of 918 insurance companies from 36 European countries for the period 2017-2021. The solvency indicators used in this paper are the equity-to-assets ratio, debt-to-assets ratio, and debt-to-equity ratio, respectively, which are obtained from the balance sheets of the companies. As independent variables, return on assets, liquidity level, firm size, conservation ratio, and the COVID-19 pandemic are employed. Panel two-stage least squares (2SLS) regression analysis is utilized as a solution methodology. As a result of the analysis, a strong and negative association is found between company size and solvency values. Significant linkages are found between the other independent variables, such as return on assets, liquidity, and conservation rates, and the solvency variables. Moreover, it is observed that the COVID-19 epidemic has a negative effect on the solvency factors.

Abstract

This paper analyzes the impacts of selected financial variables on the solvency values of 918 insurance companies from 36 European countries for the period 2017-2021. The solvency indicators used in this paper are the equity-to-assets ratio, debt-to-assets ratio, and debt-to-equity ratio, respectively, which are obtained from the balance sheets of the companies. As independent variables, return on assets, liquidity level, firm size, conservation ratio, and the COVID-19 pandemic are employed. Panel two-stage least squares (2SLS) regression analysis is utilized as a solution methodology. As a result of the analysis, a strong and negative association is found between company size and solvency values. Significant linkages are found between the other independent variables, such as return on assets, liquidity, and conservation rates, and the solvency variables. Moreover, it is observed that the COVID-19 epidemic has a negative effect on the solvency factors.

Yazarlar

Yusuf AKGÜL

Anahtar Kelimeler

Solvency, insurance, insurance level variables, COVID-19 pandemic, 2SLS

JEL Codes

G22, G32

Yayın Bilgileri

Cilt 3, Sayı 1, 2023 · Sayfa 43-56

DOI: 10.52898/ijif.2023.5

Dosyalar