Impact of Internal Factors on Financial Performance of Indian Life Insurance Sector

Life Insurance sector is one of the important pillars of risk management mechanism which provides help and support to individuals and group of people to manage their risk. Life insurance provides financial security to the family; it also helps in growth of the economy. The efficient risk management system requires sound financial performance of insurance sector. The financial performance of insurance sector depends on many internal factors therefore, finding out internal factors affecting the profitability is essential. The aim of the present research work is to explore and analyze the impact of internal factors on the profitability of Indian life insurance sector. The study period for the study is from financial year 2009-2010 to 2014-2015. This study has considered 23 life insurance companies for the present research work. Correlation and Multiple Regression Analysis are used to analyze the impact of independent variables on the dependent variable i.e., profitability of Indian life insurance sector. Return on Equity which is one of the financial performance indicators is considered to be dependent variable and Age, Capital, Foreign Holdings, Growth Rate, Reinsurance and Yield on Investments are considered as independent variables. Results revealed that Age, Capital has significant impact and Foreign Holdings, Growth Rate, Reinsurance and Yield on Investment has insignificant impact on the profitability measure i.e., Return on Equity (ROE).