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Reinsurance and Financial Performance of Non-life Insurance Companies in Ghana

Author

Listed:
  • Charles Andoh
  • Susana Adobea Yamoah

Abstract

The study examines how premiums ceded to a reinsurer affect the profitability of non-life insurance companies in Ghana. Secondary data on reinsurance ceded, combined ratio, assets, liabilities and return on assets for 20 non-life insurance companies over the period 2008–2018 were sourced from National Insurance Commission whilst interest and exchange rates variables were obtained from the Bank of Ghana. Panel regression model was employed for the analysis of the data collected. The results show that purchasing high levels of reinsurance alone does not affect the profitability of non-life insurance companies, but the combined effect of reinsurance and solvency ratio significantly impact their profitability. Managers of non-life insurance companies in Ghana should increase their ability to repay all financial obligations in the short, medium and long term in combination with reinsurance. This will enable insurers to stabilize growth, earn profits and meet their obligations to policyholders in a timely fashion. JEL Code: G22

Suggested Citation

  • Charles Andoh & Susana Adobea Yamoah, 2021. "Reinsurance and Financial Performance of Non-life Insurance Companies in Ghana," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 46(2), pages 161-174, May.
    • Handle: RePEc:sae:manlab:v:46:y:2021:i:2:p:161-174
    DOI: 10.1177/0258042X21989942
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    More about this item

    Keywords

    Combined ratio; panel regression; profitability; reinsurance; solvency ratio;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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