Financial and Investment Performance Measurement of Insurance Firms in Nigeria: X-Raying the Key Deterministic Variables

Abstract

Apanel data set covering from 2017 to 2021 was utilized in this study to analyze key determinants of the financial and investment performance of insurance companies in Nigeria. Investment and financial performance are proxied using investment yield while the predictors are measures relating to numbers of economic and firm specific variables, which are the profit/interest rate levels, equity returns, size of company, solvency margin, liquidity, and contribution/premium growth, chosen based on relevant theory and literature. Three models of panel data estimation are employed for this study. Based on the empirical results, this study finds that company‟s size, insurance/ reinsurance dependence and solvency margin are statistically significant determinants of the financial and investment performance of the insurance companies in Nigeria. For Linkage Assurance Plc, all factors are statistically significant determinants of financial performance, except for equity returns. As these factors are important in determining the Nigeria‟s general insurance companies‟ financial performance, it was recommended that it should be capitalized on to further improve and sustain their financial and investment performance. As size plays an important factor in the financial performance of the insurance companies, it was further recommended that the industry should undertake the expansion of their businesses locally and offshore through branding and the offering of diverse and innovative products to meet the wider needs of the consumers.

Keywords

• investment
• financial
• insurance
• investment yield
• liquidity
• equity returns
• premiums

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