Part 1: INTRODUCTION This examination exactly looks at the connection among benefit and liquidity, of insurance agencies in Mauritius by utilizing relapse models and relationship investigation. The objective of any business is to make benefits. On the off chance that it doesn't make benefit, it will before long leave presence. Business need to guarantee that it has enough cash not exclusively to cover costs, yet guarantees that something is left finished. Benefit of an aorganization can be influenced by numerous components, among which there is liquidity. Each partner has an enthusiasm for the liquidity position of his related organization. Workers are likewise having enthusiasm for the liquidity of their organization with a specific end goal to know whether the organization can meet its representatives' connected commitments that are pay, annuity, and provident store. Investors are occupied with understanding the liquidity because of its gigantic effect on the productivity. One can comprehend the liquidity position by examining the money related proclamations of an organization. Liquidity position of an organization can analyzed through financing choices or venture choices. 1.1 Definition of Liquidity Liquidity is characterized as the capacity of an organization to meet its fleeting commitments. It is likewise the capacity of the organization to change over its advantages into money. It is all the more unequivocally the capacity of an organization to meet the money requests of its arrangement and contract holders with no or unimportant misfortune (Claire et al., 2000). The advantages and liabilities of an organization mirror its liquidity profile. Since liquidity chance is innate in the budgetary establishments, one must have the capacity to comprehend measure, screen and deal with this hazard (Douglas and Raghuram, 2001). Liquidity Risk As indicated by Claire et al., (2000), 'liquidity is the capacity to meet expected and sudden requests for money through progressing income or the offer of a benefit at honest esteem'. Liquidity chance is the hazard that, at a point in time, a substance will be in shy of money or fluid resources for achieve its money commitments (Darling, 1999). This may result in a run-on-the-organization occasion, which is a case of misfortune because of this hazard which causes the fall of an establishment. This kind of occasion can happen amid a discouragement whereby most clients request to have their money paid promptly and that interest surpassed money holds. Different less sensational misfortunes can happen when an organization needs to get out of the blue or offer resources at an unforeseen low value (Stewart and Raghuram, 1998) 1.2 Profitability Benefit is characterized as the capacity of an organization to produce wage which outperforms its liabilities. Productivity is estimated by various proportions, for example, Return on Equity (ROE), Price to Earnings Ratio (PER) and Return on Assets (ROA) among others. The estimation of benefit is fundamental to each organization (Eljelly, 2004). Protection controllers either empower benefit, when worried about dissolvability, or try to constrain it, when directing rates. To speculators and safety net providers, productivity assumes a basic job. To policyholders of a stock safety net provider, it sounds like markup, while to those protected by a shared organization, it has no effect (McClenahan, 1999). Enz and Karl (2001), express that productivity is liable to predictable and precise assurance under a given arrangement of traditions and bookkeeping rules. Benefits are imperative to financial specialists and administration as wellsprings of profits and development. Benefits give better security against bankruptcy to back up plans and controllers. 1.3 Background on Insurance Sectors in Mauritius The initial two insurance agencies (Phoenix Assurance Company and the Commercial Union) were set up in 1835 by the British. In 1845, the Mauritius Marine Insurance was framed by Mauritian investors. A second Mauritian organization was set up called the Mauritius Fire Insurance organization in 1854. From that time till date, new organizations have risen. Directly there are 16 insurance agencies working in Mauritius. Every one of these organizations are occupied with Life business, General business or both. Insurance agency LINE OF OPERATION Old English Mauritius Assurance Co Ltd Extra security Gooney bird Insurance Co Ltd Life and General Insurance English American Insurance Co Ltd Life and General Insurance Island Life Assurance Co Ltd Extra security Indian Ocean General Assurance Co Ltd Life and General Insurance Celebration Insurance Mauritius Ltd Life and General Insurance Llyods Mauritius Co Ltd Life and General Insurance La Prudence Mauricienne Assurance Ltd Life and General Insurance Lamco International Insurance Ltd Life and General Insurance Extra security Corporation of India Extra security Mauritian Eagle Co Ltd Life and General Insurance Mauritius Union Assurance Co Ltd Life and General Insurance New India Assurance Company ltd General Insurance Swan Insurance Co Ltd General Insurance State Insurance Company of Mauritius Ltd Life and General Insurance Sun Insurance Company Ltd Life and General Insurance Table 1.1: List of Insurance Companies and their individual lines of activity 1.3.1 Liquidity issues in Mauritius Every insurance agency has their own structures and approaches to deal with every one of the dangers in their activities including liquidity. What's more, they need to submit to the rules on liquidity given by the Financial Services Commission and Section 23 of the Insurance Act 2005. Insurance agencies have additionally to build up an alternate course of action which should enable them to deal with their liquidity on a worldwide combined premise. Later mechanical and money related advancements have given insurance agencies new intends to fund their exercises and to deal with their liquidity (Vittas, 2003). The liquidity of insurance agencies ought to for the most part be all around arranged since the recurrence, timing and seriousness of protection claims and advantages are very dubious (Levene, 2003). Insurance agencies acquire their liquidity through (I) Underwriting: Underwriting is computed as premium incomes subtract installments and working uses; (ii) Investment Income: Investment salary comprises of profits, acknowledged capital gains on stocks and coupon installments and main installments on securities and (iii) Asset Liquidation: Assets liquidation is essentially worried about stock deals and securities on the money related markets (Holden and Ellis, 1993). 1.4 Problem Statement The inevitable proportion of productivity of the liquidity arranging and control is the impact it has on gainfulness. The organizations' inclination of exceptional yield on resources for increment their gainfulness influences their liquidity positions. Accordingly, an investigation in the protection area in Mauritius is done to affirm this announcement. 1.4.1 Research Objectives The examination targets of the investigation are as per the following: I. To evaluate the effect of liquidity on benefit of Mauritian insurance agencies ii. To decide the connection among liquidity and gainfulness iii. To assess the effect and essentialness of the distinctive liquidity proportions on productivity 1.4.2 Aim and Objectives of the Dissertation The point of this paper is to research the connection among productivity and liquidity inside the Mauritian setting, specifically in the protection area. An econometric model would be utilized for this examination think about. A similar model will be utilized to test the effect of liquidity on benefit of thirteen insurance agencies, in particular Anglo Mauritius Assurance Co Ltd, Albatross Insurance Co Ltd, British American Insurance Co Ltd, Island Life Assurance Co Ltd, Indian Ocean General Assurance Co Ltd, Jubilee Insurance Mauritius Ltd, Llyods Mauritius Co Ltd, Lamco International Insurance Ltd, Mauritian Eagle Co Ltd, Mauritius Union Assurance Co Ltd, Swan Insurance Co Ltd, State Insurance Company of Mauritius Ltd and Sun Insurance Company Ltd.>