IDEAS home Printed from https://ideas.repec.org/a/onl/ejoeaf/v8y2023i1p1-14id874.html
   My bibliography  Save this article

Underwriting risk, firm size and financial performance of insurance firms in Kenya

Author

Listed:
  • Alex Maina Kamau

Abstract

The purpose of this study was to investigate moderating effect of firm size on the relationship between underwriting risk and the financial performance of insurance firms in Kenya anchored on agency theory. Panel data was collected from 54 insurers that operated in Kenya for the ten years (2010-2018). The unbalanced panel data was analyzed using Random and Fixed effect model where Hausman test select model for testing the hypotheses. The study found that underwriting risk had a significant negative effect on financial performance. firm size negatively moderated the relationship between; underwriting risk and financial performance. High underwriting risk reduce financial performance, the situation is worse in larger firms than small firms. The study recommends that insurance firms should divert their focus towards increasing premium to reduce underwriting risk and enhance their financial performance. Finally, it is crucial for the insurance firms to utilize Equity Capital optimally such that it does not become a liability as a consequence of the interest paid.

Suggested Citation

  • Alex Maina Kamau, 2023. "Underwriting risk, firm size and financial performance of insurance firms in Kenya," Eastern Journal of Economics and Finance, Online Science Publishing, vol. 8(1), pages 1-14.
    • Handle: RePEc:onl:ejoeaf:v:8:y:2023:i:1:p:1-14:id:874
    as

    Download full text from publisher

    File URL: http://onlinesciencepublishing.com/index.php/ejef/article/view/874/1537
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:onl:ejoeaf:v:8:y:2023:i:1:p:1-14:id:874. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Pacharapa Naka (email available below). General contact details of provider: https://www.onlinesciencepublishing.com/index.php/ejef/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.