IMPACT OF NET CLAIM RATIO AND NET RETENTION RATIO ON FINANCIAL PERFORMANCE OF INSURANCE COMPANIES IN NIGERIA

Tajudeen Olajide Salaudeen, Rafiu Adekunle Salam, Ganiyat Abiola Mudashiru

Abstract


Regardless of the fact that insurance companies are imperative part of Nigerian economic system, Nigerian insurance companies have been facing several challenges on how to meet up with their profitability goal effectively and efficiently. This study investigated the impact of Net Claim ratio and Net Retention ratio on financial performance of insurance companies in Nigeria. This study adopts the Correlation research design. The data were obtained from secondary sources through the annual reports of listed insurance companies in Nigeria. The sample size of Ten insurance companies were randomly chosen for this study. Multiple regression techniques were used for the analysis. Data was analyzed via regression analysis. The results revealed that, Net Claim ratio and Net Retention ratio have insignificant impact on financial performance of insurance companies in Nigeria. The study concluded that Net claim ratio (NCR) and Claim ratio (NCR) have insignificant impact on financial performance of insurance companies in Nigeria.  The study therefore recommended that rather than see reinsurance as a cost centre, insurance executives should view it as an important risk management mechanism.


Keywords


Net Claim ratio, Net Retention ratio, Financial Performance, Insurance.

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