Impact of Insurance Sector Investment on the Capitalisation of Nigerian Exchange Group (1999-2021)

Abstract

This study investigates the impact of insurance sector investment on the capitalisation of the Nigeria exchange group; for the period 1999-2021. Secondary data are collected from the Central Bank of Nigeria (CBN) statistics bulletin; 2021. The study uses the capitalisation of the Nigerian exchange group as the dependent variable. In contrast, total insurance investment, Total income of insurance companies, and total insurance premiums from the Nigerian exchange group are used as the explanatory variables to measure insurance sector investment. Hypotheses are formulated and tested using time series econometric techniques. The study indicates that total insurance investment has a significant positive impact on the capitalisation of the Nigerian stock market group. The total income of insurance companies has no significant impact on the Nigerian exchange group's capitalisation. The study reveals that total insurance premiums have a significant negative impact on the capitalisation of the Nigerian stock market group. The coefficient of determination indicates that changes in insurance sector investment variables can explain about 64% of the Nigerian exchange group's capitalisation variations. The study concludes that insurance sector investment has a significant impact on the capitalisation of the Nigerian exchange group. The study, therefore, recommends that there should be further consolidation in the Nigerian insurance market in conjunction with the National Insurance Commission (NAICOM) and the Securities and Exchange Commission (SEC). Insurance businesses should increase stock market investments to get a better return on such assets. For the growing number of premiums traded on the Nigerian Stock Exchange, the premiums of insurance firms listed on the floor should be reasonable to the policyholders.