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The purpose of this empirical study is to examine the relationship between key risk management components such as catastrophic indicators, underwriting practices, liquidity levels, and the retention index, and their impact on the financial performance of Algerian insurance companies. The research was conducted over a four-year period, from 2017 to 2021, using quarterly data from Algeria’s insurance company. The analysis was divided into two models. The first model concentrated on the effects of disasters and underwriting techniques on economic performance, while the second model examined the effects of retention and liquidity on economic profitability. The autoregressive distributed lag model (ARDL) was used for both models. The study showed that catastrophic risk and underwriting risk have a negative impact on short-term economic profitability, while liquidity risk and retention risk have a positive impact. Additionally, there are balanced long-term relationships between these risks and economic profitability. The study provides valuable insights into how certain risks affect an insurance company’s profitability. Using these findings, the Algerian Insurance Company can improve its risk management strategies, increasing profits and financial security in the long term. These findings may be useful not only for this specific company but also for other insurance companies dealing with similar risks. This study stands out for its specific focus on the Algerian insurance sector, thorough analysis of various risk factors, the use of the ARDL model, reliance on financial data, and its practical implications for the industry. These distinct features contribute to advancing academic understanding and offering valuable insights for insurance professionals and policymakers.
Kamel et al. (Tue,) studied this question.