Determinants of Financial Performance of Non-Life Insurance Companies in Nigeria.

Abstract

Several factors affect the financial performance of non-life insurance firms, including liquidity, leverage, firm size and firm age which are the focus of this study. The dynamic impact of these predictors has often been overlooked by the traditional approaches of evaluating financial performance. This study assessed the effect these variables have on the financial performance of non-life insurance firms in Nigeria. This study adopted ex-post facto research design and secondary data for 15 years (2009 – 2023) was obtained from the annual financial reports and accounts of 16 selected insurance companies listed on the Nigerian Exchange. A quantitative analysis with the aid of the Generalized Linear Model (GLM) revealed that a higher liquidity enhances financial performance by ensuring operational stability and efficient claims payment; larger firms perform better due to advantages of economics of scale; excessive leverage hampers performance due to increased financial risk; while firm age does not guarantee improved financial outcomes. The study recommends that insurance firms focus on strengthening liquidity management, pursue strategic expansion and recapitalization through mergers and acquisitions, and invest in strategic innovation in order to gain competitive edge.