A Multivariate Model for Predicting the Efficiency of Financial Performance for Property and Liability Egyptian Insurance Companies

This paper uses the financial data of some property-liability insurance companies in Egypt to develop a multivariate model that reflects the efficiency of financial performance. Data will be classified statistically among three categories of financial performance based on the results of fuzzy clustering. The predictive variables in the multivariate model are represented as 25 financial ratios, which are more commonly used in describing the financial performance of the insurance company. Factor analysis has been utilized as a data reduction technique. The paper also examines the effect of the insurance company’s ownership type (public vs. private). A multivariate model should be better able to identify the efficiency of financial performance by comparing the results of discriminant analysis and logistic regression.

Key Words: Financial performance, factor analysis, fuzzy clustering, discriminant analysis, logistic regression, property and liability insurance, Egyptian insurance companies