The relationship between investment and financial performance of insurance companies in Kenya

Abstract

The purpose of this study was to establish the relationship between investment and financial performance of insurance companies in Kenya. The study took the form of a descriptive study with a target population of 45 insurance companies in Kenya. All the 45 insurance companies were involved in the study. Secondary data was successfully collected from 32 insurance firms. Multivariate regression analysis and correlation analysis were carried out to establish the nature of the relationship between investment and financial performance. The study established insurance companies in Kenya invest their funds in three popular areas. These include investments in real estate that holds the largest funds in terms of investments; investments in deposits with other financial institutions where the firms hold certificates of deposits and investment in Government securities. These investments in real estate, certificates of deposit, Government securities, corporate bonds and stocks have a significant impact on the financial performance of the insurance companies since they explain more than 50% of the variance in financial performance. There however other factors those are outside this study that account for the remaining 47.6% of the remaining variance on the financial performance of the insurance companies.