This study analyzes the financial performance of Pakistan insurance industry during the period 2004-2014 in an attempt to assess future growth and potential. Though the growth of Pakistan insurance industry is satisfactory. Performance of Pakistan insurance industry has been analyzed through different profitability measure i.e. Return on Asset, Return on Equity and Return on invested capital as well as the impact of insurance industry on financial development sector of Pakistan. Life Insurance Companies of Pakistan have positive and significant effect and have proper role of leverage, age, risk, corporate governance and macroeconomics variables (Inflation and GDP Growth) on profitability of insurance companies in Pakistan. Whereas, liquidity, tangibility, premium growth are found insignificant. Non-Life Insurance Companies of Pakistan has positive and significant effect of leverage, Premium Growth, risk, CG and liquidity on profitability of insurance companies, while age, tangibility, inflation are non-significant and does not play a key role in profitability of insurance companies of Pakistan. Life and Non-Life Insurance Companies in Pakistan has significant effect of insurance specific variables, corporate governance and macroeconomics variables on profitability of life and Non-life (both) insurance companies of Pakistan. The thesis evaluates long run and short run relationship among insurance business and financial development sector. The results show that insurance business positively affects financial development sector in short run as well as in long run and have positive impact on financial sector development. Supervisor:- Dr. Attiya Yasmin Javid