EFFECTS OF CASH FLOW RISK MANAGEMENT ON FINANCIAL PERFORMANCE

2013

The study investigates the impact of risk management on performance of insurance companies. The research was done in Nairobi, in particular AIG insurance company where most of the respondent’s work. AIG have made investments in personnel, processes and technology to help control business risk. Historically, these risk investments have focused primarily on financial controls and regulatory compliance. The objectives of this study were aimed at knowing the impact of risk management on performance of insurance companies. Random sampling was used to select fifty one respondents. The research instruments majorly used included a set of questionnaires; for the respondents. The data collected has been presented using descriptive techniques and especially frequency distribution tables, pie charts and bar graphs. The findings of the study reveal that on operational risk management the underlying causes of operational risk losses are not always initially observable. It can be difficult to unco...

HBRP Publication , 2023

This study examined the impact of risk management on the financial performance of listed insurance companies in Nigeria. The study specifically examined the extent to which operational risk and liquidity risk influence the return on asset of listed insurance companies in Nigeria. A sample size of the 25 listed insurance companies was selected which is equally the population of the study. The study made use of secondary data. The data were obtained from the annual reports of the insurance companies and Nigeria Stock Exchange (NSE) fact book from the year 2011-2017. Data collected was analyzed using descriptive and inferential statistics. The descriptive statistics used include meaning, standard deviation, minimum and maximum values while the inferential statistics used were Pearson movement correlation coefficient and multiple linear regression analysis. The result of the correlation analysis revealed that all the variables have a relationship with each other. Also, the results of regression analysis revealed that operational risk positively influenced the financial performance of listed insurance companies with a coefficient of 0.0316899 and a p-value of 0.0000 significant at 5%. Similarly, liquidity risk also showed a positive influence on the financial performance of listed insurance companies with a coefficient of 0.0123241 and a pvalue of 0.010. Therefore, the study concluded that risk management significantly influenced the financial performance of listed insurance companies in Nigeria.

European Journal of Business and Management, 2020

Financial risk if not properly taking care of in a business might lead to its collapse especially, insurance companies whose core business deals with day to day handling of risk, in light of this, the study examined the effect of financial risk on financial performance of listed insurance companies in Nigeria from 2009 to 2018. Population of the study consist of 27 listed insurance companies and a sample size of (19) firms. The study used secondary data obtained from annual report of the firms and Correlational design was used. Financial performance which is the dependent variable measured by return on asset (ROA) while independent variable are credit, liquidity and solvency risks. The results from the fixed effect regression proved that credit risk has negative and significant effect on financial performance, Liquidity risk has negative and insignificant effect on ROA and solvency risk has positive and significant effect on ROA. The study concludes that credit risk has adverse influence on ROA of listed insurance companies in Nigeria. The report advises that Nigerian insurance providers should do better to adequately control their receivable number by supplying their debtors with payment plans that are appropriate for servicing their outstanding debt or loan.

Izvestiya Journal of the University of Economics - Varna, 2021

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 d...

2015

Insurance industry is becoming stronger as their capital base; new satellite offices and annualized premium income keep on increasing. It is not clear of the clear cause of the collapse of the insurance firms. The purpose of this study was to assess the influence of risk management practices on financial performance of life assurance firms in Kenya. The study's specific objectives were: To find out the extent to which underwriting practices influence financial performance of life assurance firms in Kenya, to find out the extent to which claims adjustment provisions influence financial performance of life assurance firms in Kenya and to establish the extent to which premium valuation methods influence the financial performance of life assurance firms in Kenya. The target population was one hundred and eighteen respondents. Census sampling method was used. Questionnaires were used for data collection. The data was analyzed using descriptive statistics which involved the use of per...

The general objective of the study is to find out the determinants of the profitability of insurance firms in Ghana. Secondary data on financial reports were collected from sixteen insurance firms in Ghana for the period 2005 to 2010.The study was quantitative in nature. It adopted the longitudinal time dimension, specifically, the panel method and ordinary least square regression. The study discovered that, apart from tangibility which has a negative relationship, there is a positive relationship between leverage, liquidity and profitability of insurance firms in Ghana. It was also concluded that, the profitability model adopted has been explained in respect to all the independent variables and that the degree of error is less than 20%. Finally, it is suggested that the explanatory variables used in this study should be regressed on Return on Equity to find their extent of relationship on profitability. 1.0 introduction The financial system comprises of financial institutions, financial instruments and financial markets that provide an effective payment, credit system and risk transfer and thereby facilitate channelizing of funds from savers to the investors of the economy. According to Frederic S. Mishkin & Stanley G. Eakins (2009), financial markets and institutions not only affect your everyday life but also involve huge flows of funds – trillions of dollars-throughout our economy, which in turn affect business profits, the production of goods and services, and even the economic well-being of countries other than the United States. Indeed, a well-functioning financial markets and institutions are one of the most important key factors in producing high economic growth, and poorly performing financial markets and institutions are one of the reasons that many countries in the world remain desperately poor. Every firm is most concerned with its profitability. One of the most frequently used tools of financial ratio analysis is profitability ratios which are used to determine the company's bottom line. Profitability measures are important to company managers and owners alike. If a small business has outside investors who have put their own money into the company, the primary owner certainly has to show profitability to those equity investors. There has been a growing number of studies recently that test for measures and determinants of firm profitability. Financial industry's profitability has attracted scholarly attention in recent studies due to its importance in performance measurement. However, in the context of the Insurance sector particularly in developing countries or emerging markets like Ghana it has received little attention. According to a study conducted by Ahmed et al (2011) on the determinants of performance, it indicated that size, risk and leverage are important determinants of performance of life insurance companies of Pakistan. According to their study Return on Asset (ROA) has statistically insignificant relationship with growth, profitability, age and liquidity. According to Wright (1992), due to the unique accounting system used by life insurance companies, profitability of the industry has always been difficult to measure as compared with other financial institutions or corporations. For insurers, profitability is affected by a host of factors including actual mortality experience, investment earning, capital gains or losses, the scale of policyholder dividends, and federal and state taxes. Kasturi (2006) argued that the performance of insurance company in financial terms is normally expressed in net premium earned, profitability from underwriting activities, annual turnover, return on investment and return on

Dereje Biru, 2023

Examining the impact of financial risk performance on insurance businesses operating within the Bishoftu city administration was the primary goal of this study. Data were gathered over a five-year period, from 2016 to 2020, from all workers of one government-owned insurance firm and seven private insurance companies that are now registered with NBE and operate under the Bishoftu administration. The study methodology utilized was explanatory. In order to meet the study's goal, a mixed research approach was used. Information was gathered from insurance company personnel through semi-structured interviews and a closed-ended, mixed-item questionnaire. It was also gathered from the firms' annual reports and manuals. 48 employees make up the target population, and the purposeful sampling technique is used to select a sample from the population in order to achieve the study's goal. Descriptive statistics, correlations, multiple linear regression analysis, Ordinary Least Square (OLS), and the Classical Linear Regression Model (CLRM) were used to examine the gathered panel data. Among the researcher's principal discoveries were The study shows that credit risk had a negative and significant impact on the financial performance of insurance companies; the liquidity ratio had a negative and significant impact on the financial performance of insurance companies; the technical provision risk had a negative and significant impact on the financial performance of insurance companies; and the underwriting risk had a negative and significant impact on the financial performance of insurance companies in Ethiopia .In order to monitor and control the nature, characteristics, and quality of the credit portfolio, the researcher recommends that insurance companies identify potential or existing credit risk by creating and implementing efficient credit granting, documenting, and collection procedures. Additionally, the company be supposed to invest its idle cash in liquid assets that improve liquidity to ensure that it can meet its short-term financial obligations and hold sufficient reserves for its outstanding claims by evaluating its liabilities and drawing on their prior experience to develop comprehensive procedures to effectively monitor insurers should improve their underwriting performance through strategies like product selection, increase claims handling practice, and gather sufficient information or detail about the subject matter of insurance before agreeing with the insured to provide sufficient premium price for insurance policies. In addition, insurers should control their outstanding claims. Key words: ROA, financial performance, insurance companies

European Journal of Business and Management, 2016

Insurance companies are mainly known for their role of hedging against risk covering an individual or even a business. In Uganda, insurance related to business activities is not common. Despite this fact, there are businesses that have insurance policy for their operations. It has however not been clear whether the responsiveness of the insurance companies in Uganda help these businesses subscribed to them to succeed and continue normally in their operations. This necessitated a research study to be conducted to establish whether responsiveness of insurance companies in their operations was useful and had significant influence onto success and continuity of businesses operating in Uganda. The main ingredients of responsiveness of insurance companies and their success as well as continuity were also assessed. The research was based on a sample of 201 respondents from the insurance companies as well as from the business community. The results indicated that responsiveness of insurance...

Journal of Insurance and Financial Management, 2022

The study examined the relationship between claims management, risk management, and financial performance of selected composite insurance companies in Nigeria. There are thirteen composite insurers in the industry out of which seven were randomly selected with full consideration to their annual report for 10 years (2010-2019) through the Nigerian Insurers Association Digest. The ex-post facto research design was employed. The findings show that underwriting practice, Premium valuation, worth of the Net claim, and derived claim ratio are positively significant to influence risk management practices. The study, therefore, concluded that underwriting guidelines employed by insurance companies in Nigeria increase the value of an investment and have a positive effect on the financial performance of composite insurance firms in Nigeria. Adjusting claims and benefits paid to policyholders of insurance firms increase the value of investment thus resulting in acceptable costs for every person which is usually determined by observed costs based on risk factors. The study recommends that the management of insurance firms should consider adopting Premium valuation methods to ensure the financial performance of composite insurance firms in Nigeria. This will allow management to create a comprehensive understanding that can be leveraged to influence stakeholders and create better decisions.

European Journal of Business and Management, 2017

Every business organization faces a problem which hinders its objective for which it is established. So, like any business organization Nile Insurance Company faces many problems which affects its profitability and the main purpose of this study is to assess factors affecting profitability of Nile Insurance Dire Dawa branch. To do so, a discriptive research design together with primery and secoundray data were applied and data were collected form 319 active customers inaddtion to the interview made with branch manager. The result shows size, leverage, tangibility of asset, loss ratio/ risk, firm growth and managerial efficiency are identified as significant determinants of profitability hence Liquidity and age of the company have medium significant determinants of profitability in addition to brand preference and perceived quality which have high impact on insurance selection process by coustomers. Keywords : Insurance ,perceived quality ,brand preference, leverage, tangebil...