Performance evaluation and ranking of insurance companies in Tehran Stock Exchange by financial ratios using ANP and PROMETHEE

Abstract

Given the importance of the insurance industry in the global economy and how it impacts the service sector, insurance companies need to function successfully in their goals. Knowing how to achieve the goals of organizations in today's complex and dynamic environment is important for the managers. Therefore, a model for evaluating the performance of the organization is essential. In this paper, a combination of multiple criteria decision-making approaches has been used for evaluating the performance of insurance companies in Tehran Stock Exchange. Initially, by opinions of experts and the literature study, seventeen key financial ratios related to performance evaluation of insurance companies in Tehran Stock Exchange were selected. Then, by using the analytic network process, the relative importance of each criterion (Ratios) was determined. It was found that the level of liquidity is more important to assess the performance of insurance companies in Tehran Stock Exchange. After determining the relative weights of selected financial ratios, financial data to each of the companies reviewed were collected from the financial statements of these companies and selected financial ratios for each company was calculated. Finally, by running the promethee technique, companies were ranked based on financial performance and Parsian insurance company had the highest performance.