The study investigated the determinants of financial performance of selected insurance firms in Nairobi County. The target population was 55 licensed insurance firms (42 locally owned insurance firms and 13 Foreign owned insurance firms).  The study used two respondents in each insurance firm who were Finance Managers and Corporate Affairs Managers and all these had total of 96 respondents. The study used both primary and secondary data. The main primary data source was semi structured questionnaire. The data from the study was analyzed qualitatively and quantitatively using percentages, means and frequency distribution with the aid of Statistical Package for Social Sciences (SPSS) version17. Since data was descriptive, variants such as means, frequencies and percentages were used to describe the findings of the study. Bivariate – ANOVA statistical data analytical technique was used to find the determinants of financial performance of selected insurance firms in Nairobi County. The study concluded that insurance firms had liquid investments which helped them to settle claims especially if their underwriting income cannot cover claims. The firms would sell off their investments if they lacked money to settle claims. Majority of insurance firms relied on cash flow from operations in liquidity management. This implied that all firms had certain source of funds for liquidity management. The study recommended that insurance firms should establish a well matched portfolio of their assets and liability in terms of cash flows or rather they should ensure that they create additional reserve so that it can assist them to cover the interest rate since low interest may create a discrepancy on the earnings. 

Key Terms: Equity Returns, Financial performance, Liquidity, Premium Rate, Resources, Retention Ratio, Stakeholders

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