Unraveling Profitability Determinants of Insurance Companies in Kazakhstan: Exploring Firm-Specific and Macroeconomic Factors

This study aims to examine factors that influence the drivers of financial performance and the effect of variables on the financial performance of insurance companies in Kazakhstan for the past 10 years, from 2011 to 2021. A list of 32 companies in this period was selected. Data and methodology on insurance companies of Kazakhstan were retrieved from the available public sources of information such as The Agency for Strategic Planning and Reforms of the Republic of Kazakhstan Bureau of National Statistics, World Bank, The Agency of the Republic of Kazakhstan for regulation and development of the financial market and National Bank of the Republic of Kazakhstan. To conduct this analysis, the Feasible generalized least squares (FGLS) methodical approach was used with the implementation of STATA software. Originality is that the contribution is twofold. Firstly, the factors of profitability of insurance companies in Kazakhstan must be identified. Secondly, the uniqueness of this research is that there have not been any studies that empirically investigated and analyzed elements that measure insurance businesses’ financial performance using the application of the FGLS model. The results of this research analysis state that some insurance-specific variables, such as gross written insurance premiums, firm size, capital adequacy and liquidity ratio, are significant in determining profitability. This study depicted that size and gross written insurance premiums have had a considerable effect on insurance organizations in positive and negative ways, respectively. Also, macroeconomic variables such as GDP growth and population growth are more likely to have a significant influence on the profitability of insurance companies. However, for this research paper, it was shown that only the growth rate of GDP had a substantial and positive effect on insurance companies’ financial performance, whether population growth did not affect profitability. The time dummy for this article was chosen from 2020 to 2021, which is the COVID-19 pandemic crisis period.