عبدالرضا عیسوند حیدری

The increase in the number of concerns regarding financial crises and risks has led to the introduction of financial stability (FS) sub-indices by some international institutions. The emergence of financial problems and the subsequent scandal under the name of financial bankruptcy affect many shareholders, insurers, investors, and other beneficiaries. At the same time, the insurance industry supervisors need an efficient tool to investigate the internal challenges of the country's insurance industry. Nevertheless, one-dimensional indicators do not have the strength necessary to express all the effects of such challenges and reactions, the purpose of this paper is according to the statistics and time series information from 2006-2018 of Iran insurance companies, the calculation of a principal index under the title of FS for the insurance industry. Using 27 sub-indexes calculated from the theoretical and empirical literature and the principal component approach (PCA) method, the PCA of FS of the insurance industry has been calculated. The results showed that the FS of Iran’s insurance industry in the long term has a downward trend, which shows the critical situation of this industry. But, in the short term, it has a fluctuating trend. On the other hand, the results show that the capital market's reaction to the change in the trend of the principal index of FS is a rational response.