Lagos State University Researchers Detail Findings in Economics and Business (Effects of Reinsurance Utilisation on the Capital Adequacy of Non-life Insurance Companies in Nigeria): Economics – Economics and Business

2023 MAY 17 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Fresh data on economics and business are presented in a new report. According to news reporting out of Lagos State University by NewsRx editors, research stated, “Reinsurance is one the most significant risk management tools employed by primary insurers. Its level of utilisation is hinged on capital sufficiency of primary insurer.”

Our news editors obtained a quote from the research from Lagos State University: “Despite its usefulness, many researchers have queried its excessive reliance. This study examined the effect of reinsurance utilisation on the capital adequacy of non-life insurance company in Nigeria. The study adopted a descriptive research design and relied on secondary data of gleaned from annual financial statements between 2011 and 2020. The study population comprised of all the fifty-six (56) non-life insurance firms in Nigeria. Stratified sampling technique was adopted in selecting twenty. These selected companies (market leaders) controlled more than 70% market share of the industry. The study adopted reinsurance dependence and reinsurance ceded proportion as proxies of reinsurance utilisation while financial leverage and return on asset were used as indicators of capital adequacy. The study revealed a significant joint effects of reinsurance utilisation on the return on asset and financial leverage of non-life insurance companies in Nigeria.”

According to the news editors, the research concluded: “The study recommended that reinsurance facilities be given adequate attention by insurance companies. More importantly, non-life insurance companies should diversify their investment portfolios and take into cognizance underwriting factors such as past loss experience, size of risks and frequency of losses.”

For more information on this research see: Effects of Reinsurance Utilisation on the Capital Adequacy of Non-life Insurance Companies in Nigeria. Acta Universitatis Danubius: Oeconomica, 2023,19(2). (Acta Universitatis Danubius: Oeconomica - http://journals.univ-danubius.ro/index.php/oeconomica/index). The publisher for Acta Universitatis Danubius: Oeconomica is Danubius University.

Our news journalists report that additional information may be obtained by contacting Olufemi Abass, Lagos State University, Ojo, Lagos. Additional authors for this research include Temidayo Olubusade.

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