Assessment of the financial stability of insurance companies in Ukraine under new challenges
Authors: Prykaziuk Nataliia , Shchuka Yullia 
Published: October 2023

Introduction. Today, the activities of insurance companies, like any other economic entities, are subject to a number of risks caused by new socio-economic conditions in the world, the existence of a touchless economy, recurring pandemics, and military aggression against Ukraine. Consequently, all these external factors have a certain impact on the stability of individual insurers and the insurance market as a whole.
Objective. The objective of this article is to assess the financial stability of insurance companies in Ukraine, determine changes in stability characteristics of insurers of different types based on their key performance indicators, and identify the factors that influenced the formation of stability during turbulent times. To achieve this objective, the following tasks were set: to formulate a methodological toolkit for assessing the financial stability of insurance companies and to conduct relevant calculations for several years in Ukraine.
Methods. The study employs a methodological toolkit based on a combination of cluster analysis and multifactor analysis. The research also utilized data standardization methods, exploratory data analysis, correlation matrix construction, variance analysis, and others.
Given the increased dynamics of the external environment and the constantly emerging new challenges for determining financially stable insurers, a set of indicators characterizing their activities was used, based on which coefficients were calculated to comprehensively reflect the state of insurance companies and their potential impact on their stability.
For the study, over 30 insurance companies that operated in Ukraine as of the end of 2016, 2019, and 2022 were selected. The sample included insurance companies with different characteristics to reflect the situation in the insurance market as a whole, rather than just a specific segment. The initial data were formed by analyzing the reports of insurance companies.
Results. As a result of the analysis, the examined insurance companies were divided into two clusters for each year. The first cluster consists of insurers with unsatisfactory indicators, while the second cluster consists of insurance companies with satisfactory coefficient values, thus being more financially stable.
It was found that in recent years, there has been a decrease in the number of insurance companies, influenced, among other factors, by the COVID-19 pandemic, economic instability in the country, difficulties in complying with and implementing updated NBU requirements, and challenges in obtaining reinsurance protection and insuring Ukrainians who have emigrated. Moreover, the situation worsened after the introduction of martial law and the start of hostilities on Ukrainian territory.
It was also revealed that the financial stability of insurance companies significantly depends on the coefficient of financial autonomy, the coefficient of loan capital concentration, the coefficient of financial dependency, and the stability of financing coefficient. The financial capability of insurance companies at present is dependent on the capital reserves and the structure and quality of their assets in the pre-war period.