The Role Of Capital Adequacy In Enhancing The Financial Health Of Nigerian Listed Insurance Companies
Chioma Jessy Okwy
Department of Insurance Faculty of management Sciences Niger Delta University Bayelsa State.
Abstract
The study examines how capital adequacy measures impact the insurance industry's financial performance. The financial reports of the listed insurance companies from 2012 to 2021 served as the source of panel data. When it came to capital adequacy ratios, Tier I, Tier II, adjusted capital ratio, and capital to asset served as proxies. While for financial performance, the insurance industry's return on equity served as proxy. The E-View statistics tool was used to facilitate the application of panel regression analysis. The research explored the implication of capital sufficiency on the profit of insurance companies using R-square, modified R-square, regression coefficient, probability value, Durbin Watson, and F-statistic. According to the research, variations in capital adequacy measures accounted for 79.4% of the variance in the listed insurance businesses' return on equity. This suggests that capital adequacy played a considerable role in clarifying the variation in ROE. The ROE of the insurance firms is meaningfully correlated with the Tier One capital; the quoted insurance firms' return on equity is meaningfully connected with the Tier Two capital; the quoted insurance firms' ROE is favourably and considerably correlated with the adjusted capital ratio; and the quoted insurance firms' ROE is positively and meaningfully connected with the capital to risk asset. The research concludes that capital adequacy has a considerable implication on the return on equity of the listed insurance businesses, based on the regression summary. To improve the financial outcome of the insurance companies
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References
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