Fundamental Risk Factors and Financial Performance of Insurance Firms in Kenya
| dc.contributor.author | Wanyonyi, Douglas Sifuna | |
| dc.date.accessioned | 2026-04-07T07:02:54Z | |
| dc.date.available | 2026-04-07T07:02:54Z | |
| dc.date.issued | 2025-09 | |
| dc.description | A Research Proposal Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Science in Finance of Kenyatta University, September, 2025 Supervisor: 1.Job Omagwa 2.Vincent Mutswenje | |
| dc.description.abstract | The financial performance of Insurance firms holds a vital function in increasing the Insurance sector's market value and leads to the economy's overall growth. There exists substantial empirical evidence on fundamental risk factors and financial performance in other sectors. However, there are limited studies that have delved into the link between fundamental risk factors and the financial performance of Insurance firms. The tendency of declining financial performance of the Insurance firms in Kenya is a cause for concern among various stakeholders. The financial performance showed a downward trend from 2011 to 2018 before a little bullish movement in 2019. This research aimed to analyze fundamental risk factors and financial performance of Insurance firms in Kenya. The financial performance of Insurance firms was measured by the operating ratio. The study's specific objectives were to ascertain the effect of inflation, interest, and exchange rates on the financial performance of Kenya's insurance firms. The research further established the moderating effect of capital adequacy regarding fundamental risk factors and the financial performance of the Insurance firms in Kenya. The research was supported by the portfolio, expectations, and the Liquidity theories. The study adopted the Positivism philosophy and an Explanatory research design. The study used quarterly data from the insurance firms in Kenya and used STATA software to analyze. Data analysis was done through Descriptive statistics, Pearson's simple correlation, and time-series regression over a scope of 10 years. The hypothesis was tested at the 0.05 level of significance; findings indicate that Interest rates had a negative but not statistically significant effect on financial performance at p value of 0.081. In addition, Inflation rates had a negative but not statistically significant effect on financial performance with a p value (p value=0.863), and exchange rates had a positive statistically significant effect on financial performance (p value= 0.000). Lastly, capital adequacy with a (P=0.0000<0.05) had a significant moderating effect on the relationship between fundamental risk factors and financial performance. As a result, Insurance firms should focus on managing the risk posed by exchange rate movement to reduce the operating ratio. Secondly, Kenyan Insurance firms should strategically select debt capital taking into account the timing, cost, and debt capital structure to positively control the incidence of interest rates on their financial performance. Thirdly, Kenyan insurance firms should factor in the effect of inflation rates while pricing insurance contracts to strategically distribute the effect inflation rates to the policyholder in the quest to achieve a positive outlook on financial performance. | |
| dc.description.sponsorship | Kenyatta University | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/32894 | |
| dc.language.iso | en | |
| dc.publisher | Kenyatta University | |
| dc.title | Fundamental Risk Factors and Financial Performance of Insurance Firms in Kenya | |
| dc.type | Thesis |