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Growth Potential and Profitability Analysis of Insurance Companies in the Republic of Serbia



Author(s)

Dragana Ikonić, Nina Arsić
Snežana Milošević

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DOI:10.17265/1537-1506/2011.11.005

Higher School of Professional Business Studies, Novi Sad, Republic of Serbia
Economic and Trade High School, Senta, Republic of Serbia

Economically developed countries hold much of its total wealth as financial savings, and they should faster experience higher rates of overall economic growth in the long run. Given the level of income made by economic entities and according to such correlation, their propensity to save can be generated. As a clear reflection of the development of the financial sector, insurance companies as financial intermediaries, through the mobilization of savings, contribute to the development of the entire financial sector. Analyzing the performance of insurance companies in Serbia, CARMEL method will be applied, which includes indicators for the presentation of quantitative criteria for the purpose of monitoring and analyzing the profitability of insurance companies consisting of a model that is the current methodology of the MMF. In addition to traditional financial instruments, derivative securities are traded in financial markets, promoting the development of financial markets, such as options, which are generators of potential growth of profitability. The aim of this paper is to show the growth potential of profitability in insurance companies, as well as decreasing risks which are connected to the business activities by the use of options.

growth, profitability, insurance companies, options