Accounting and Financial Performance Analysis of Insurance Companies in Brazil in 2007: a Study Supported by Analytic Hierarchy Process (AHP)

Abstract

This article aims to analyze the accounting and financial performance in the Brazilian insurance companies, applying Analytic Hierarchy Process (AHP) to information in the year 2007. For this, we use information about profitability, management efficiency (operational expenses), claims and risk (use of debt), that are the factors resulting from factor analysis done with the accounting and financial ratios available in the database of Conjuntura Econômica Magazine (2008). To analyze the performance, the factors are consolidated into a single multicriterial indicator of accounting and financial performance obtained by applying the AHP. An innovation in the application of AHP in this study is the use of Cluster Analysis as a tool for the alternatives pairwise comparison, when we have a large number of comparisons. The performance analysis shows that the best insurance is the Safra and the worst result is due to the Sulina. The results show that there is no relationship between the accounting and financial performance, obtained by applying the AHP, and size, considering the earned premiums values as a proxy. Nevertheless, it was possible to observe the impact of size on accounting and financial performance, with significance level of 5 %, because the performance of five smaller insurers was significantly higher than the top five. Even in an incipient way, this may be showing a change in the standards of performance in the insurance sector, where the focus may be out of financial issues (common to large insurance companies that belong to large financial conglomerates) for more operational as the portfolio quality and other congeners.