Effects of Mergers and Acquisitions on Growth of Insurance Firms in Kenya

Abstract

Mergers and acquisitions continue to be a highly popular form of corporate development across the globe. Many organizations facing challenges in recent times have often adopted mergers and acquisitions as a means of corporate growth. However, contrary to their popularity, acquisitions appear to provide at best a mixed performance to the broad range of stakeholders involved. This research fills the gap in literature by investigating the effects of mergers and acquisitions on growth of Insurance firms in Kenya between the period 2000 and 2015. The specific objectives was to determine the effects that M&A deals have on growth of profitability; to establish the effects that M&A deals have on market growth and to establish the effects of M&A on achieving synergy for insurance firms in Kenya. The research adopted a census survey research design. The process of data collection involved the use of questionnaires consisting of both structured and semi-structured questions. Secondary data was also used to obtain required information. Sources of Secondary data included annual reports from AKI and IRA, financial statements, journals and public records. The data collected was recorded, coded, presented and analysis done. Descriptive statistics such as percentages, frequencies, measures of central tendency such as Mean and Median was used to analyze the data through the statistical Package for Social Sciences (SPSS).Comparison and analysis of ratios was used to compare the effect of M&A on growth during pre-merger and post merger period. The output was presented in the form of tables, bar chart, pie charts, frequencies, percentages and graphs. The findings showed that the variable with highest significance on growth of Insurance firms is profitability. The study recommends that Insurance firms need to adopt mergers and acquisitions in order to enhance profitability, increase market share and achieve synergy.