Analysing the determinants of financial performance for UK insurance companies using financial strength ratings information

We investigate the determinants of financial performance of UK insurance companies based on their financial strength ratings. We use data from the A.M. Best Insurance for 49 UK insurers for 2006-2009. Our findings show that profitability, liquidity, size and organisational form are the significant determinants that affect financial performance of insurance companies in the UK. We recommend an effective, alternative variable to more effectively measure the size of an insurance company, which is based on the gross premium written. We find that gross premium written is more appropriate for measuring company size in the insurance industry.