INVESTMENT PORTFOLIO AND FINANCIAL PERFORMANCE OF LIFE INSURANCE COMPANIES IN KENYA
Abstract
The purpose of this study was to investigate the effect of portfolio investment on the financial performance of life insurance companies in Kenya. A descriptive survey research design was used to conduct the study. All insurance companies operating in Kenya were included in the study. The target population was 26 life insurance companies in Kenya. The study targeted 113 senior managers from finance and investment departments of the 26 life insurance companies in Kenya. A sample of 75 senior managers was selected through proportionate stratified random sampling. Data was collected using questionnaires and data collection sheet. Data was analyzed using descriptive and inferential statistics. The descriptive statistics included mean, standard deviations, frequencies and percentages. Inferential statistics which included regression analysis and correlation analysis were used to establish the nature of the relationship between investment portfolios and financial performance. The data was analyzed with the aid of Statistical Package for Social Sciences (SPSS) version 25. The study concluded that investment portfolio affected financial performance of insurance companies in Kenya. 45.3% of financial performance of insurance companies was explained by mortgage investment while 49.3% of financial performance of insurance companies was influenced by bond investment. 71.6% of financial performance of life insurance companies was influenced by equity investment. Further, the R squared value of 0.731 indicated that bond investment, equity investment, mortgage investment accounted for 73.1% of the total variance in the financial performance of insurance companies. Based on the findings and conclusions the study recommended that life insurance companies in Kenya should be more proactive in diversifying investment portfolios in order to enhance financial performance. In addition, insurance companies in Kenya should expand their budgetary allocations to include adequate financial allocation to portfolio investment.
Keyword: Financial Performance, Life insurance, Investment Portfolio, Mortgage Investment, Bond Investment & Equity Investment.
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DOI: http://dx.doi.org/10.61426/sjbcm.v5i4.918
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