This study examines the determinants of insurance companies' performance and their impacts on Nigerian insurance industry from 2010-2019.
No doubt insurance companies' performance determinants play significant roles in the overall development and growth of the insurance industry. In particular, the study assessed the impact of returns on assets on leverage ratio; retention ratio; underwriting risk; and management competence index; and on the overall performance of the Nigerian insurance industry from 2010-2019. Secondary data were sourced from 32 licensed insurance companies who their financial reports were readily available for the purpose of this study. The study used expo facto research design and data were gathered from published annual reports of NAICOM, insurers' annual financial reports and NIA digests from 2010-2019. Both descriptive and inferential statistics of OLS were employed in analysing the data using E-views version 10.
This study led to the conclusion that profitability of insurance companies in Nigeria is positively and significantly influenced by leverage, management competence index, retention ratio and underwriting risk. The study recommended among others that for that insurance companies in Nigeria to perform better in terms of their return on assets, they should improve on their leverages, retention ratio, underwriting and management competence index by recruiting employees who had completed higher education and who are certified professionals.
Table of Contents
1.1 INTRODUCTION
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVES OF THESTUDY
1.4 RESEARCH QUESTIONS
1.5 RESEARCH HYPOTHESES
1.6 SIGNIFICANT OF THE STUDY
1.7 SCOPE/LIMITATION OF THE STUDY
2.0 Empirical Literature Reviews
2.1 Conceptual Reviews
2.1.1 Meaning and Concepts of Financial Performance of Insurance Companies
2.1.2. Determinants of Financial Performance of Insurance Companies
2.1.3 Overview of the Nigerian Insurance Industry
2.2 Theoretical Reviews
2.2.1 The Stakeholder Theory Perspective
2.2.2 The Theory of Causality
2.2.3 Resource Based View Theory
2.2.4 Dynamic Capability Theory
2.3 Empirical Literature
3.1 RESEARCH METHODOLOGY
3.2 Research Design
3.3 Population
3.4 Sample
3.5 Sampling Technique
3.6 Types and Source of Data
3.7 Discription of Variables
3.7.1 Returns on Assets (ROA)
3.7.2 Management Competence Index
3.7.3 Debt Leverage
3.7.4 Retention Ratio
3.7.5 Underwriting Risk
3.8 Model Specification
3.9 Method of Analysis
3.10 Econometrics Issues
3.10.1 Normality
3.10.2 Multicollinearity
3.10.3 Linearity
3.10.4 Autocorrelation
3.10.5 Heteroscedasticity or Homoscedasticity
4.0 DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.1 Data Presentation
4.2 Descriptive Data Analysis
4.3.3 Test of Hypotheses
4.4 Discussion of Findings
5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
5.2 Conclusion
5.4 Recommendations
Research Objectives and Focus Areas
This study focuses on identifying and analyzing the determinants of insurance company performance in Nigeria from 2010 to 2019, specifically investigating how internal factors affect Return on Assets (ROA).
- Impact of Management Competence Index on insurer profitability
- Relationship between debt leverage and financial performance
- Influences of retention ratios on underwriting results
- Assessment of underwriting risk factors in the Nigerian context
Excerpt from the Book
1.2 STATEMENT OF THE PROBLEM
The concept of financial performance has received a significant attention from scholars in the various areas of business and strategic management (Barney, 1991). It is of primary concern of virtually all business stakeholders in any sector since financial performance is an ingredient to organizational health and ultimately its survival (Batra, 1999).
Literatures from past studies reveal that the findings from most researchers have not reached to a common conclusion. Specifically, their findings did not indicate the relationship between the various factors which they found to determine financial performance of insurance companies. Furthermore, the findings by Mwangi (2013), Wabita (2013), and Mutugi (2012) were inconclusive. Studies elsewhere (Soye& Adeyemo, 2017; Aduloju & Ajemunigbohun, 2017), reveals that the factors that influnce organizational performance are specific and different in different markets. It is worth mentioning that many studies ( e.g. Obonyo, 2016; Murigu, 2014; Lee, 2012) have been conducted in the area of factors influencing insurance companies' performance. Nevertheless, previous studies (e.g. Soye& Adeyemo, 2017; Aduloju & Ajemunigbohun, 2017), conducted by other researchers do not provide a common answer regarding the impacts of factors such as leverage, management competence index, age, underwriting risks on performance of insurance companies (measured by returns on assets).
Given also that most studies ( e.g. Obonyo, 2016; Murigu, 2014; Lee, 2012) were conducted in other countries, these findings do not exactly reflect the situation in the Nigerian Insurance industry, which therefore leaves a gap with regard to factors influencing the performance of insurance companies in Nigerian Insurance industry. The study therefore seeks to fill the gap in knowledge by establishing the relationship between the determinants of performance and the Nigerian insurance industry performance.
Summary of Chapters
1.1 INTRODUCTION: Examines the vital role of insurance companies in the financial system and the need to identify success factors for economic development.
1.2 STATEMENT OF THE PROBLEM: Highlights the lack of consensus in previous studies regarding determinants of performance and the necessity for specific Nigerian contextual research.
1.3 OBJECTIVES OF THESTUDY: Outlines the primary goal of examining how specific indicators like leverage and management competence influence financial performance.
1.4 RESEARCH QUESTIONS: Presents the investigative questions linked to the identified performance indicators.
1.5 RESEARCH HYPOTHESES: Lists the null hypotheses designed to test the significance of identified performance determinants.
1.6 SIGNIFICANT OF THE STUDY: Explains the value of the findings for executive managers, policyholders, and regulatory bodies like NAICOM.
1.7 SCOPE/LIMITATION OF THE STUDY: Defines the study boundaries, focusing on Nigerian insurance companies from 2010-2019.
2.1 Conceptual Reviews: Provides definitions of financial performance and details factors such as leverage, liquidity, and underwriting risk.
2.2 Theoretical Reviews: Discusses foundational theories including stakeholder theory, causality, resource-based view, and dynamic capability.
2.3 Empirical Literature: Reviews previous research findings on firm performance in various global insurance markets.
3.1 RESEARCH METHODOLOGY: Describes the methodology, including data sources and the use of OLS regression.
4.0 DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS: Presents the trend analysis and econometric test results for the sample companies.
5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS: Synthesizes the core findings and provides policy suggestions for industry stakeholders.
Keywords
Determinants, Leverage, Retention, Underwriting, Index, Performance, Insurance, Profitability, Return on Assets, Management Competence, Nigeria, Financial Services, Risk Management, Corporate Strategy, Regression Analysis.
Frequently Asked Questions
What is the core focus of this research?
The research investigates the primary determinants of insurance company performance in Nigeria between 2010 and 2019, specifically analyzing their impact on profitability.
What are the primary performance indicators used?
The study utilizes variables such as debt leverage, retention ratio, management competence index, and underwriting risk to measure their effects on Return on Assets (ROA).
What is the main research objective?
The main objective is to establish a quantified relationship between specific internal organizational factors and the overall financial performance of the Nigerian insurance industry.
Which methodology is adopted?
The study employs an ex post facto research design, using secondary data and inferential statistics, specifically Ordinary Least Squares (OLS) regression analyzed via E-views software.
What does the main body of the work cover?
It provides a robust theoretical framework, an overview of the Nigerian insurance history, and a detailed empirical analysis of how the chosen variables correlate with performance.
Which keywords define this work?
Key terms include determinants, financial performance, leverage, retention, management competence, underwriting risk, and insurance industry stability.
How does management competence affect profitability?
The analysis indicates a significant positive impact, suggesting that firms with higher concentrations of certified professionals and well-managed human assets perform better.
Does debt leverage positively impact insurer performance in Nigeria?
Yes, the findings suggest that appropriate use of leverage increases shareholders' returns, although the study cautions against excessive borrowing that could lead to bankruptcy risks.
What impact does retention ratio have on financial outcomes?
The study concludes that a higher retention ratio, when coupled with a low claims ratio, has a significant positive impact on the company's financial performance.
What is the specific role of underwriting risk?
Underwriting risk, when managed effectively, is shown to be pivotal, and the study advocates for sound underwriting guidelines to ensure resilient financial health.
- Citar trabajo
- Abasiama James (Autor), 2024, Determinants of Insurance Companies' Performance and their Impacts on Nigerian Insurance Industry, Múnich, GRIN Verlag, https://www.grin.com/document/1464327
