Insurance Companies In Nigeria Research Articles

Effect of Risk Mitigation on Profitability of Insurance Industries in Nigeria

Risk management plays a critical part in every organization‘s profit maximization through risk cost minimization for wise protection, which cannot be overstated. Risk mitigation (rmt), risk monitoring (rmn), risk management environment, procedure, and policies (epp), and risk measurement (rme) in relation to the profitability of the insurance industry in Nigeria were randomly selected from a wellstructured 5-point Likert scale questionnaire ranging rom ‘5 strongly agree‘ to ‘4 agree‘, ‘3 undecided‘ to ‘1 strongly disagree‘. Using the StataSE 14 statistical software, one hundred and twenty (120) questionnaires were recovered from respondents, accounting for 83 percent of the total questionnaires sent using the multiple regression statistical methodology. Risk reduction and risk monitoring have a considerable impact on the profitability of insurance companies in Nigeria, according to the findings. As a result, it concluded that risk mitigation and monitoring are important factors in determining industry profitability, and those insurance regulators should work to ensure that risk identification, assessment, measurement, and control mechanisms are implemented in accordance with best global practices in order to avoid financial crises and improve insurance performance.

Board Attributes and Value of Listed Insurance Companies in Nigeria: The Mediating effect of Earnings Quality

Effective administration of a firm depends largely on the quality and commitment of the board of directors, who are expected to control the activities of the firm based on ethical and professional standards to ensure that corporate affairs are in line with corporate objectives. This study examines the mediating effect of earnings quality on the relationship between corporate board attributes and the value of listed insurance companies in Nigeria. The study utilized secondary sources of data collected from annual reports of the sampled companies for the periods 2009 to 2018. The population of the study comprises of all twenty seven (27) insurance companies listed on the Nigerian stock exchange, out of which fifteen (15) were selected as study sample. Data generated were examined by means of descriptive statistics to provide summary statistics for the variables and subsequently, correlation analysis was carried out using Pearson correlation technique for the correlation between the dependent, independent variables and the mediating variable. Path analysis using Structural Equation Modeling was used; also Monte Carlo’s test was employed to determine the significant of the indirect effect. It was found that board size, board meetings and women directorship significantly affect firm value. It also reveals that board size and board independence significantly affects earnings quality of listed insurance companies in Nigeria. Furthermore, the study finds that earnings quality does not significantly mediates the relationship between board size, board independence, women director, board meeting and firm value. However, it is mediating partially. This indicates that board attributes through the quality of the reported earnings a higher firm value will be achieved. Hence the study concludes that the direct association between boards attributes mechanisms and firm value is more crucial than their indirect association mediated by the earnings quality. Thus, the study recommends that investors should pay more attention to companies with high number of directors, as provided in the NAICOM code of corporate governance. Also, in order to have proper checking by independent directors, NAICOM should also ensure a strict adherence to the provision of the code to improve the quality of earnings and enhance the value of the listed insurance companies in Nigeria.

Ruin probability of insurance companies in Nigeria using model with economic environment: Pre and post capitalization analysis

Ruin probability of insurance companies in Nigeria using model with economic environment: Pre and post capitalization analysis

IFRS 4 Disclosure and Firm Performance of Insurance Companies in Nigeria

IFRS 4 is an International Accounting Standard Board providing guideline for the accounting of insurance contract. This paper therefore, examined the compliance of IFRS 4 and performance of quoted Insurance Companies in Nigeria. The study further investigate the extent of compliance with disclosure requirements of IFRS 4 and determined the relationship between ROA, liquidity, ROE, leverage and firm size with compliance of IFRS4 disclosure. Quantitative grading system was used to investigate the extent of compliance. Multiple regression analysis was further used to find out the relationship between ROA, liquidity, ROE, leverage and firm size with compliance of IFRS 4 disclosures. The study found that the sampled companies complied at 90% which suggest a strong compliance. ROA, ROE, and Liquidity have a positive significant relationship with compliance with a p-values of 0.0324<0.05, 0.01<0.05, and 0.0247<0.05 respectively. The study also found that leverage is negative but has a significant relationship with compliance. Therefore, the study recommends that, the Inspectorate unit which is the monitoring and enforcement mechanisms need to be improved upon. Although, the level of compliance is good, but mandatory disclosures are meant to be fully complied with 100%.

Mergers, Acquisitions, and Corporate Financial Performance in the Financial Technology Inclined Quoted Insurance Companies in Nigeria

The research empirically examines effect of Mergers and Acquisitions on Corporate Financial success of Quoted Insurance Companies in Nigeria. It has become expedient in the face of the drastic increase in Mergers and Acquisitions activity in recent decades and the fact that there has been very little empirical evidence of positive wealth effects and particularly the success of M&A in the insurance sector. This has arisen because most studies in Nigeria have rather focused on the banking sector. Data was obtained from Quoted Insurance Companies from 2003 to 2016 and the Regression Techniques were employed in the study. The result indicated that there exists a positive effect of M&A on Corporate Financial Performance of Insurance Companies. It revealed that a unit increase in merger led to about 4% increase in the Corporate Financial Performance of the merged firms. In effect, a unit increase in Earnings after Merger actually led to about 8% increase in the Corporate Financial Performance of the same firms. The study hereby recommend that Insurance Companies should look at issues of Claims settlement, Product Development and Branding while the National Insurance Commission (NAICOM) should look into the education of insurable clients as well as appropriate polices that would drive Insurance penetration in Nigeria.

Integrated Reporting Disclosures and Firm Value of Listed Insurance Companies in Nigeria

This study empirically investigated integrated reporting and corporate financial performance of listed insurance companies in Nigeria for the period 2010 to 2019. The study employed ex post facto and correlational research design. The sample size of the study consisted of insurance firms listed on the Nigerian Stock Exchange. The data for the study was obtained from the published annual financial statements of the sampled insurance companies and descriptive statistics, diagnostic test, unit root test, was used for data analysis while multiple regression analysis for the test of hypotheses. The result from the regression analysis revealed that integrated reporting positively and significantly affects the corporate financial performance of listed insurance firms in Nigeria. Also the control variables of debt, liquidity, corporate size and risk suggested both negative and positive significant influence on corporate financial performance of listed insurance firms in Nigeria. The paper concluded that integrated reporting affects the corporate financial performance of listed insurance companies in Nigeria. Therefore, the paper recommends amongst others that the Financial Reporting Council of Nigeria (FRCN) should make the adoption of integrated reporting compulsory across companies listed on the Nigerian Stock Exchange in a bid to improve the relationship between integrated reporting and financial performance of firms.

Poor Claims Settlement And Demand For Insurance Policies In Nigeria

This study investigates the poor claims settlement and demand for insurance policies in Nigeria to provide empirical evidence which would assist not only the insurance companies but also the policymakers by using these findings to design future insurance services and policies that can be geared towards promoting insurance market development. The population focused in the study included few licensed insurance firms in Nigeria. This is due to the fact that they dominate and control the larger interest in the market share. Primary data was used for this study through well-structured questionnaire. Chi- squared statistics and correlation with the tabulated contingency table on the basis of an assumptions were employed. The results show that poor claim settlement has significant effect on demand for Insurance policies in Nigeria and that there is long term and significant relationship between poor claim settlement and demand for insurance policies in Nigeria. The study therefore, recommends that insurance industry should be redefined through appropriate Acts, introducing competitions and innovations in the services so as to compete effectively and meet consumer needs by dealing with changing expectations of policyholders so as to ensure that satisfaction of all the parties are guaranteed.

The Nexus between Gross Domestic Product (GDP) and Financial Performance of Firms: Empirical Evidence from the Nigerian Insurance Industry

This study looked at the impact of gross domestic products (GDP) on the Financial performance of insurance firms in Nigeria using gross written premium (GWP), profit before tax (PBT), total assets (TA), capital employed (CE) and shareholders fund (SHF) as proxies for financial performance. The study adopted the theories of shareholder primacy theory also known as the shareholder value theory and signalling theory. shareholder primacy theory sees organisation as entities with the primary objective of maximising the wealth of the shareholder while signalling theory looks at the propensity to change of financial performance to changes in GDP figures. Using secondary data sources, findings from the results of our regression analysis show that Nigeria’s GDP has an impact on Total assets, total capital employed, profit before tax and shareholders fund but has negligible impact on the gross written premiums of insurance firms in Nigeria. It was therefore recommended that government should seek to contribute positively to GDP growth through the instrumentality of fiscal and monetary policies, enterprises should contribute to GDP growth through taxes and employee benefits and firms should adopt a bullish approach to consumption for better GDP outcomes . Keywords: impact, gross domestic products, financial performance DOI: 10.7176/RJFA/12-6-07 Publication date: March 31 st 2021

Effect of Audit Quality on Earnings Management in Insurance Companies in Nigeria e

The main objective of the study is to determine the effect of audit quality on earnings management in insurance companies in Nigeria with special consideration on accruals and performance measures of earning manipulations using insurance companies in Nigeria. Preliminary analyses were conducted, such as descriptive statistics and correlation matrix. In analyzing the data, the study adopted panel multiple regression to identify the possible effects of audit quality on earnings management of financial institutions in Nigeria We interpreted fixed effect analysis after using Hausman test. The result shows that audit quality had a significant effect on earnings management. We conclude that longer stay of auditors in financial institutions increases accrual and performance manipulation. However, financial institutions audited by the Big 4 auditing firms are associated with less accrual and performance earnings manipulation while financial institutions that have executive and non-executive directors as members of audit committee have greater accrual and performance earnings manipulations. Higher number of financial experts in audit committee increases accrual manipulation while higher number of experts with accounting background in audit committee reduces performance manipulating. Finally, increase in auditors’ fee leads to choices of using accounting methods to manipulate both accrual and performance earnings. Therefore, the study recommends that, financial institutions should have maximum number of years for auditors to stay. They should focus more on increasing the number of experts with accounting background in audit committees. Accounting bodies should regulate auditors’ fee in line with the size of the financial institution. (JEL M42) Keywords: Audit Fees, Audit Committee Independence, Audit Firm Size, Audit Quality, Earnings Management, Financial Literacy of Audit Committee Members, Length of Audit Tenure.

Motor insurance business portfolio and the gross premium of insurance industry: A case of Nigeria

Purpose of the Research: This study examines the contribution of motor insurance business to the gross premium income of Nigeria insurance industry. Methodology: The research design used for this study is ex-post-facto design. Ordinary least square (OLS) regression model used to analyze the secondary data extracted from statistical bulletin of the Central Bank of Nigeria (CBN) from 1981 to 2011, and Nigeria Insurers Association (NIA) digest from 2012 to 2018. The population for this research is the entire quoted insurance companies in Nigeria. The sample size for the study is 38 years (from 1981 to 2018). Findings: The result of the findings shows that insurance premium of motor has no significant effect on insurance gross premium of Nigeria. In the same vein, insurance premium income of general accident has no significant effect on gross premium income of insurance companies in Nigeria. Implications: The government and insurance regulatory bodies should develop more strategies to ensure high compliance to third-party motor insurance buying in Nigeria. Originality: The originality of study is no doubt because there are very few of studies on motor insurance in Nigeria

Linking Mission Statements Components to Management Effectiveness

This study examines mission statements and management effectiveness in “first generation” insurance companies in Nigeria. Content analysis method has been applied with the mission statements and data collected from annual reports (2013-2018) of six insurance companies. In terms of the data analysis, Pearson correlation and descriptive statistics have been employed. The results suggest that the mission statements’ components including the product/service, growth orientation, competences, public image and personnel are crucial for management effectiveness proxied by two ratios of return on equity (ROE) and return on assets (ROA). The study, therefore, recommends that businesses must include in their mission statements, product/service, growth orientation, competences, public image and personnel mission statement components. The study drawback is the small sample size. The study has also proposed area for further research and managerial implications.

Performance Evaluation of Motor Insurance Companies: Panel Data Evidence from Nigeria

This paper evaluated performance of motor insurance companies in Nigeria. The objectives were to determine the following: 1) significant effects of claims settlements on motor insurance firms’ earned premium; 2) differences in managerial/technological capabilities among the companies and 3) effects of policy (or time effect) on insurance firms’ output within the study period. Panel data obtained for this study comprised operational data on premium earned and direct claims settlement by these companies over a period of six (6) years. Using panel data statistical models, we found that direct claims settlement negatively affected insurance companies’ earned premium. Also, significant differences in technological and managerial capabilities were found to exist among the companies, though only one company exhibited this heterogeneity. Besides, there were no policy impacts (or time effect) on vehicle insurance firms’ output in the study period. Policy implications of the results were discussed.

An Analysis of Health Insurance Data Using the Directed Acyclic Graph: An Application in Nigeria

Background: In this study, we used the total amount of insurance claims from patients in Nigeria as the data to investigate the direct and indirect effects of the diagnoses. Methods: We applied the Directed Acyclic Graph (DAG) with the total amount of the claims for each month for 89 diagnoses using datasets drawn from private insurance companies in Nigeria from January 2015 to September 2016, which provided 21 records for each diagnosis. Results: The result from DAG showed three pairs of direct effects: (1) Absolute Neutrophil Count (ANC) had a direct effect on appendectomy, (2) Sexually Transmitted Infections (STIs) had a direct effect on caesarean section, and (3) Glaucoma had a direct effect on insomnia. Conclusion: The most interesting result pertained to the third pair of diagnoses which is pertinent to research worldwide. We not only explored the relationship in a scientific way, but also the direction of the effect provided a basis for recommendations for healthcare in Nigeria and worldwide.

Macroeconomic Risk and Its Effect on Income of Insurance Companies in Nigeria

Macroeconomic Risk and Its Effect on Income of Insurance Companies in Nigeria

FINANCIAL RISK AND THE VALUATION OF LIFE INSURANCE COMPANIES IN NIGERIA: A 2008 – 2017 ANALYSIS

This study is an attempt to investigate the relationship between financial risk and the valuation of life insurance companies in Nigeria. Financial risk being the risk organizations are exposed to in financial markets is represented by liquidity risk and interest rate risk while the value of the life insurance industry is assessed through the return on equity and the combined ratio. The authors seek to achieve two objectives which are to determine the relationship between changes in interest rate and the combined ratio and to investigate the relationship between liquidity risk and the return on equity of life insurance companies in Nigeria. The expost facto research design is adopted for the study and biannual data is sourced from Nigerian Insurers’ Association (NIA), CBN Statistical Bulletin and World Bank database spanning through 2008 – 2017. Descriptive statistics, stationarity tests, and cointegration tests are carried out on the data to test the suitability of the data. Hypothesis are tested through regression analysis which reveals that whereas there is a significant relationship between interest rate risk and the combined ratio, there is no significant relationship between liquidity risk and the return on equity. It is therefore recommended that life insurers should adopt a risk-based approach in their operations to enhance the value of the sector. An effective inculcation of appropriate risk management practices would help the insurer to identify internal and external risks which are likely to pose challenges to the value of the life insurance industry. JEL: G22; E43 Article visualizations:

Impact of Company Characteristics on Aggressive Tax Avoidance in Nigerian Listed Insurance Companies

Tax avoidance has been identified as one of the tools companies used legally to pay less to government as corporation taxes. This attributed to low revenue target from taxes, thus, holding the continent back by starving the government of the revenue it needs for development. It is against this background, this study examined company characteristics and aggressive tax avoidance in Nigerian listed insurance companies. It assessed the impact of firm size, profitability, leverage and firm age on aggressive tax avoidance of listed insurance companies in Nigeria. The study adopted ex-post facto research design, and data were drawn from the audited annual reports of twenty (20) random sample listed insurance companies between 2010 and 2018. The model of the study was estimated using a two-step system GMM panel model estimator. The results of the study revealed that firm size (coeff of 0.628) and Leverage ( with coeff of 0.549 ) have a positive and significant (p-value < 1% level of significance) impact on aggressive tax avoidance, while firm’ Profitability (coeff of -0.843 ) and Age (with coeff of -0.056 ) have a negative and significant. The study concluded that company characteristics influences aggressive tax avoidance of insurance companies in Nigeria. Specifically, firm’ size and leverage have a positive impact on aggressive tax avoidance in Nigerian listed insurance companies while firm’ profitability and Age have a negative effect on aggressive tax avoidance. Thus, the study recommends among others that firm sixe should be well formulated in accordance with regulating bodies like the Corporate Affairs Commission and National Deposit Insurance Cooperation.

Determinants of Audit Quality: Evidence from Nigerian Listed Insurance Companies

The study examines the factors that determine audit quality among listed insurance companies in Nigeria. The study adopts Ex-post facto research design, and 15 companies are purposively selected, out of 25 listed insurance companies in Nigeria as of 2018. Panel data is extracted from the annual account and reports of the selected companies over a period of ten years (2009–2018). Pearson correlation analysis, Ordinary Least Square (OLS) and Regression are the statistical tools used for the analysis. The results of the study reveal a significant relationship between the audit firm size, audit tenure, audit fee, cash flow and audit quality (p < 0.05). However, there is no significant relationship between auditors independence, joint audit and audit quality (p > 0.05). The study concludes that audit fees, audit firm size, audit tenure and cash flow from operations are major determinants of audit quality as each of them has significantly contributed to audit quality of listed insurance companies in Nigeria. Therefore, the Nigerian listed insurance companies should place a high premium on audit firm size, audit fees, and short term audit tenure when engaging services of an audit firm.

Recapitalisation and the Financial Performance of Firms: Empirical Evidence from the Insurance Industry in Nigeria

Financial Performance sits at the core of a firm’s ability to meet the expectations of its stakeholders and create sustainable value. The history of insurance in Nigeria traces back to the pre-colonial era with the creation of the Royal Exchange Assurance Agency in 1918. The industry, however, is arguably one of the least performing sectors within the Nigerian economy and the financial service sector in particular. Recapitalization reforms have been acknowledged as one of the actions that improve the financial performance of firms, this study, therefore, gauged the impact of recapitalization on the financial performance of the insurance industry in Nigeria. The study adopted the Expected Bankruptcy Cost Hypothesis, Signalling Theory and Risk-Return Hypothesis to underpin the impact of Recapitalisation reforms on the performance of firms. Using Purposive Sampling technique, the study selected the top 12 (contributing 74% of total insurance industry revenue in 2018) insurance companies in Nigeria from 2009 to 2018 and used annual reports obtained from the company’s corporate website to select variables of interest. Using Shareholders Funds (SHF) as a proxy for recapitalization and Gross Written Premium (GWP), Profit before Tax (PBT), Total Assets (TA) and Capital Employed (CE) as proxies for financial performance, Least Square regression result show a positive and substantial relationship between recapitalization and the financial performances of firms. The study, therefore, recommends that the upcoming recapitalization reforms in the insurance sector be embraced by all stakeholders as evidence suggest that the industry would be in a better financial state and well-positioned to take on large/complex in-country risk thereby forestalling capital flight. Keywords: Recapitalisation, Financial, Performance, Insurance, premium DOI: 10.7176/EJBM/12-23-07 Publication date: August 31 st 2020

Budgetary Control and Financial Performance of Insurance Companies in Nigeria

Huge economic degradation in 2016, drastic fall in oil price made Nigeria's export sector under a thread. The continuous increase in population made both life and non-life insurers a very important product or service in their lifestyle. This creates a golden opportunity for insurance business. To sustain any business, good budgetary controls practices need to ensured. It improves the financial performance. A descriptive study has been used on 230 managerial workers drawn from 15 insurance companies listed by NSE as at 2018. Audited financial statements have been used to collect many important and relevant variables. This study explores the importance of budgetary control. Through data analysis using SPSS version 16.0, Correlation, and multiple regression analysis as well as bar graph were used to obtain the result. The study recommends that effective budget implementation should be facilitated through capacity building, robust systems and processes prioritization, and close monitoring for evaluation. Stakeholders should get involved in budget execution to enhancing the overall budget implementation. Further, financial management systems should be supported in order to ensure prudent management of funds and adequate sensitization of both the employees and the public on best financial management practices to enhance the oversight role.

Corporate Board Diversity and Financial Performance: The Nigerian Insurance Sector’s Perspective

The presence of appropriate gender diversity, board size and board composition does not only promote favourable organizational ambience but also offers meaningful upsurge in the financial position of an organization relatively. It is on this premise that prompted the essence to examine the relationship between corporate board diversity and financial performance of insurance companies in Nigeria for the period 2014 to 2018. Secondary data from Cornerstone Insurance Plc. and Lasaco Assurance Plc. were employed in the study. Using the Panel least Square regression technique, the results reveal that gender diversity, board size and board composition exert insignificant influence on profit before tax as the measure of financial performance. However, while gender diversity exerts negative influence, board size and board composition exert positive influences on profit before tax of insurance companies. The study concludes that employment of appropriate number of directors and also in suitable composition as board members have positive effect on the financial performance of insurance firms. Therefore, the study recommended among others, that: appropriate ratio of executive to independent non-executive directors should be maintained among board members for better decision-making at the interest of all stakeholders. Also, the ratio of gender diversity (female to male directors) should be increased as the role of women in resource management cannot be relegated to the background especially in financial performance of insurance companies.