THE EVALUATION OF REINSURANCE MECHANISMS ON NIGERIAN INSURANCE COMPANIES: ITS PERFORMANCE AND SUSTAINABILITY

PDF

Published: 2022-12-05

DOI: 10.56557/jgembr/2022/v14i27951

Page: 40-51


BAKAREY EMMANUEL BAMIDELE *

Department of Insurance, University of Jos, Plateau State, Nigeria.

NAFIU NAJIMU AYINDE

Department of Insurance and Acturial Science, University of Lagos, Akoka, Lagos State, Nigeria.

AYUBA PHILEMON DANAN

Department of Insurance and Acturial Science, University of Lagos, Akoka, Lagos State, Nigeria.

*Author to whom correspondence should be addressed.


Abstract

The Insurance companies always stand as the backbone of most developed economy, in which reinsurance companies serve as insurance companies' bedrock. This study investigated the evaluation of reinsurance mechanisms on listed Nigerian insurance companies’ performance and sustainability. The population of the study is to cover all listed insurance firms in Nigeria and a five-insurance company is randomly selected as sample size for seven years (2012-2018) in Nigeria. Multiple regression analysis is adopted to analyze the data. The study findings established the statistically insignificant relationship between return on assets (ROAs) and net retention ratio (NRR), net claim ratio (NCR), the net commission ratio (NCoR), the ceded reinsurance ratio (CRR) respectively because the p-value (0.481) in the ANOVA table is greater than 0.05, the study therefore, suggested the acceptance of null hypotheses. It is therefore concluded that the reinsurance mechanisms do not have effect on listed insurance companies' performance and sustainability in Nigeria.

Keywords: Reinsurance mechanisms, performance, sustainability, insurance industry


How to Cite

BAMIDELE, B. E., AYINDE, N. N., & DANAN, A. P. (2022). THE EVALUATION OF REINSURANCE MECHANISMS ON NIGERIAN INSURANCE COMPANIES: ITS PERFORMANCE AND SUSTAINABILITY. Journal of Global Economics, Management and Business Research, 14(2), 40–51. https://doi.org/10.56557/jgembr/2022/v14i27951

Downloads

Download data is not yet available.

References

Kwon WJ, Wolfrom L. Analytical tools for the insurance market and macro-prudential surveillance. OECD J Financ Mark Trends. 2016;2016(1):1-47.

DOI: 10.1787/fmt-2016-5jln6hnvwdzn

IAIS. Reinsurance and financial stability. Basel, Switzerland. International Association of Insurance Supervisors.C/o Bank for International. Settlements. CH. 2012;4002.

Available:https://www.iaisweb.org

Abass OA, Obalola MA. Reinsurance utilisation and performance of nonlife business in the Nigerian insurance industry: A mixed methods approach. The J Risk Manag Ins. 2018;22(1):18-30.

Soye YA, Adeyemo DL. Evaluation of impact of reinsurance mechanism on insurance companies sustainability in Nigeria. Int J Res Innov Sustain Dev; 2017.

Copyright and Research ISSN: 2276-8122;7(1).

Aduloju SA, Ajemunigbohun SS. Reinsurance and performance of the ceding companies: The Nigerian insurance industry experience. J Bus Econ. 2017;31(1):(19-29).

DOI: 10.1515/eb-2017-0015

Obonyo SN. The effect of reinsurance programmes on financial performance of general insurance companies in Kenya. A research project submitted in partial fulfillment of the requirement for the award of the degree of Master of Science in Finance. Department of Finance & Accounting, School of Business, University of Nairobi; 2016.

Das S, Nigel D, Richard P. Insurance and issues in financial soundness; 2016.

Publications>Issues>2016/12/30>Insurance-and-Issues-in-financial- soundness-16524

James R, Joan L. The demand for reinsurance: theory and empirical tests. Ins Risk Manag. 2003;7(3):217-37.

Okotha GS. Reinsurance management-DIU 203. Study guide, chartered insurance practitioner [diploma]. In: Insurance, the Insurance Institute of Uganda; 2017.

Bressan S. The impact of reinsurance for insurance companies. Risk Gov Control Financ Mark Inst. Contact details: Free University of Bozen-Bolzano, Universitaetsplatz 1, 39100. 2018;8(4):22-9.

DOI: 10.22495/rgcv8i4p3

Izodal C. Theory and practice aspects of profitability analysis, Georgia. Journal of Science and Studies of Accounting and Finance: Problems and Perspectives. eISSN 2351-5597. 2018;12(1):12-9.

DOI: 10.15544/ssaf.2018.02

Fadun OS. Insurance, A risk transfer mechanism: An examination of the Nigerian banking industry. School of Management & business studies (SMBS). IOSR JBM (IOSR-JBM).e-ISSN: 2278-487X. 2013;7(4):93-101.

Wehrhahn R. Introduction to reinsurance. World Bank. Street: International Bank for Reconstruction and Development/the World Bank, NW. Washington (2, April). p. DC20433.Internet. Primer series on Insurance; 2009.

Available:http://www.worldbank.org/nbfi

American Institute. Introduction to reinsurance. Copyright of American Institute for Chartered Property Casualty Underwriters; n.d; 2020.

Swiss Re. Basic concepts of reinsurance. Copyright, All Rights Reserved; 2014.

Patrik GS. Reinsurance. In: Causality actuarial society: Foundations of casualty actuarial sciences. 4th ed. Arlington, VA: Causality Actuarial Society. 2001;343-484.

Burca A, Batrinca G. The determinants of financial performance in the Romanian insurance market. Faculty of Finance, Insurance, Banking and Stock Exchange; 2014.

Onsongo BJ. Determinants of financial performance for life insurance companies in Kenya. A research project submitted in partial fulfillment of the requirement for the award of the degree of Master of Science in Finance. School of Business, University of Nairobi; 2015.

Park SC, Xie X. Reinsurance and systemic risk: the impact of reinsurer down Grading on property casualty insurers. J Risk Ins. 2014;81(3):587-622.

DOI: 10.1111/jori.12045

Marijana C, Marija U, Daniel K. Firm specific characteristics and reinsurance–evidence. From Croatian Insurance Companies, MisaoPraksaDBK. God xxiii. 2014;(1):29.

Workie T. Factors influencing demand for reinsurance in Ethiopian insurance companies. Department of accounting and Finance. College of Business and Economics. Addis Ababa University; 2018.

Garven J, Lamm-Tennant J. The demand for reinsurance: theory and empirical tests. Ins Risk Manag. 2003;7(3):217-37

› sol3 › Delivery.cfm › SSRN_ID1857910_code17230.

Cummins JD, Feng Z, Weiss MA. Reinsurance counterparty relationships and firm performance in the U.S. Property-Liability Insurance Industry; 2012.

[Cited Mar 18, 2020].

Available:http://ssrn.com/abstract=1997444

Ibrahim H. Assessment of determinants of insurance companies’ performance in Nigeria. Department of business administration, faculty of administration. [retrieved on Mar 4, 2020]. Zaria, Nigeria: Ahmadu Bello University; 2016.

Wiley J. Alternative risk transfer: integrated risk management through insurance, reinsurance and the Capital Markets. Erik Banks. Copyright. C2004 John Wiley & Sons Ltd:PO19 8SQ, England. Telephone (+44) 1243 779777; 2004.

Wilkinson D, Birmingham P. Using data instruments: A guide for researchers. RoutledgeFarlmer. London and New York: Taylor & Francis Group; 2003.

Lee J. Does size matter in firm performance? Evidence from U.S. public firms. Int J Econ Bus. 2009;16(2):189-203.

DOI: 10.1080/13571510902917400

Maleya MO, Willy M. Factors affecting the financial performance of listed companies at the Nairobi Securities Exchange in Kenya. Res J Fin Acc. 2013;4(15). ISSN 2222-1697 [paper] ISSN 2222-2847 [online].

Ansah-Adu K, Andoh C, Abor J. Evaluating the cost efficiency of insurance companies in Ghana. J Risk Fin. 2011;13(1):61-76.

DOI: 10.1108/15265941211191949

Cummins JD, Dionne G, Gagné R, Nouira A. The costs and benefits of reinsurance. Cahier Rech IEA. 2008-08-04.