Abstract
In almost all emerging and developed nations, the insurance industry is one of the most important participants of the financial services sector. As a result, the goal of this study is to investigate the firm characteristics and drivers of financial performance using 121 publicly traded non-life insurance companies from 16 Southern African Development Community (SADC) countries during the period from 2008 to 2019. The consolidated least squares and two-step generalized method of moments estimators were used to analyze a panel data set of 1,452 observations. The findings show that a lagged return on assets, equity capital, operational efficiency, leverage and investment capability are statistically significant determinants of financial performance in non-life insurance companies of SADC countries, even though equity capital, operational efficiency, and leverage are inversely significant. The insurance industry, policymakers, the state, and shareholders should consider these important variables when making decisions, and enhance their performance according to the findings. It is also suggested that the industry’s capital structures should be reformed to preserve a favorable balance of equity and debt amongst the businesses. Additionally, measures such as automated systems that may decrease operating costs should be used to improve financial performance.
Highlights
The success of every company contributes to its market value and to the development of the entire sector, which in turn contributes to the economy’s general prosperity (Mwakajila & Nyello, 2021)
The goal of this study is to investigate the firm characteristics and drivers of financial performance using 121 publicly traded non-life insurance companies from 16 Southern African Development Community (SADC) countries during the period from 2008 to 2019
The findings show that a lagged return on assets, equity capital, operational efficiency, leverage and investment capability are statistically significant determinants of financial performance in non-life insurance companies of SADC countries, even though equity capital, operational efficiency, and leverage are inversely significant
Summary
The success of every company contributes to its market value and to the development of the entire sector, which in turn contributes to the economy’s general prosperity (Mwakajila & Nyello, 2021). The insurance market in SADC faces numerous issues such as low-penetration restrictions, low pay, profound ignorance and trust, elevated levels of financial exclusion, a lack of infrastructure and channels of distribution, a lack of internal skills and information, negligible coverage opportunities, substantial obstacles to retail individualization, increased burdensome regulations for liberalization, and regulatory disadvantage and smoothness (Asongu et al, 2019) These necessitate the importance of examining the firm’s characteristics (such as equity capital, company age, company size, underwriting risk, operational efficiency, claim ratio, leverage ratio, liquidity ratio, and investment capabilities), as well as firm’s financial performance. The Southern African Development Community whelming support for the insurance industry as (SADC) is an inter-governmental body It aims to a means of ensuring the economy’s long-term vipromote regional socio-economic synchroniza- ability and growth (Olarewaju & Msomi, 2021). Industry continuing to expand at a rapid pace (Nhabinde & Heshmati, 2020)
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