THE EFFECT OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF INSURANCE COMPANIES IN KENYA
Abstract
The goal of this study was to establish the effect that mergers and acquisitions have on the financial performance of the insurance sector, with special focus on insurance companies in Kenya. The specific objectives of the study were; to assess the effect of asset base on financial performance of insurance companies in Kenya; assess effect of market expansion on financial performance; assess of technology use and-long term liabilities on financial performance of insurance companies in Kenya. The target population comprised of 280 IRA and AKI, the sales force team and middle management staff members from different insurance companies that had undergone either mergers or acquisitions.A sample population of 140 respondents was selected representing 64% of the targeted population. Both primary and secondary data sources were used in data collection during implementation of this study. The results of the study found an existence of positive correlation between the predictor variable-mergers/acquisitions and the outcome variable-financial performance of Insurance companies in Kenya. The findings from this research results indicated that Long-term liabilities, rapid market expansion, and large asset base led to an improvement in the financial performance outcomes of Insurance companies in Kenya. The study concluded that product development and firms processes were significantly influenced by the adoption of technology in firms offering insurance services. The study recommeded that insurance businesses in Kenya should focus most on expanding to various business lines. Better-quality technology need to be adopted in the companies servicing insurance in Kenya. 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 in covering the interest rate since the low interest might create a discrepancy on the earnings.
Key words; Mergers and Acquisitions, Asset Base, Market Expansion, Technology, Long Term Liabilities, Financial Performance
CITATION: Mahonga, A., & Matanda, J. (2019). The effect of mergers and acquisitions on financial performance of insurance companies in Kenya. The Strategic Journal of Business & Change Management, 6 (4), 452 – 466.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i4.1402
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