Firm-Specific Determinants Variable of Insurers’ Insolvency in Zimbabwe

Timothy Olaniyi Aluko () and Kudakwashe Carol Makumbe ()
Additional contact information
Timothy Olaniyi Aluko: University of Johannesburg
Kudakwashe Carol Makumbe: University of Science and Technology

Acta Universitatis Danubius. OEconomica, 2024, issue 20(3), 202-216

Abstract: Insurance companies safeguard the resources necessary for various other economic sectors to enhance economic growth and foster favourable investment opportunities. This study examines the determinants of insolvency for non-life insurers in Zimbabwe. This was achieved by examining the impact of firm-specific variables on solvency. A panel of secondary data from 2017 to 2022 selects seventeen non-life insurance businesses from Zimbabwe. Insurance and Pension Commission (IPEC) reports provide the financial statements for these non-life insurance companies. The research examines two explanatory factors: investment performance and return on assets (profitability). The Statistical Package for Social Science (SPSS) regression model guides the investigation into the relationship between these factors and solvency. This study employs the solvency ratio as a proxy for solvency. The study’s results indicate that a firm’s size and claims ratio have a positive impact on the investment performance and profitability of non-life insurers experiencing insolvency. To manage investment portfolios properly, the paper recommends short-term insurers hire qualified and experienced investment analysts. To encourage insurance companies to honour claims and maintain their financial stability even when losses increase, the regulator must publish a risk-based capital structure and prioritise the implementation of policies and regulations that support sound financial management practices among non-life insurance companies.

Keywords: firm-specific factors; determinants; non-life insurer; solvency; performance (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dj.univ-danubius.ro/index.php/AUDOE/article/view/2853/2853 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2024:i:3:p:202-216

Access Statistics for this article

More articles in Acta Universitatis Danubius. OEconomica from Danubius University of Galati Contact information at EDIRC.
Bibliographic data for series maintained by Daniela Robu ().