Research Article

Effects of assets liability management on the solvency margin of insurance companies in Nigeria

Jinadu M. N1*, Olowokudejo Folake Feyisayo2
1 Department of Finance, Redeemer’s University, Ede, Osun State, Nigeria.
2 Department of Insurance and Actuarial Science, University of Lagos, Akoka, Lagos State, Nigeria
* Corresponding author: jinadum@run.edu.ng
Published: Dec, 2024
DOI: 10.67894/bjf.2024.3wv0y621
Pages: 76-86
Views: 9
Downloads: 3

Abstract

Asset and liability management is the strategic management of the balance sheet, for risk optimization of assets and liabilities taking into account all market risks. This is to ensure that the company’s assets are not below its liabilities thereby making the organization financially viable. Asset-liability management serves as a cost /profit function which takes into account the assumed risk, level of earnings and liquidity of the bank. The study is an empirical investigation of the relationship between assets-liability management and solvency margin in the insurance companies. The data for the research were collected from the annual reports and financial statement of six insurance companies from 2006 to 2020 using the audited accounts of the selected companies. The sample size for this study consists of six insurance companies made up of two life assurance companies, two general insurance companies and two composite companies. The findings from the analysed data showed that the relationship between asset-liability and solvency margin of an insurance company in Nigeria, the analysis showed that there is a relationship between asset liability and solvency margin of an insurance company in Nigeria. It also established that a positive Correlation between asset-liability and solvency margin with correlation coefficient of 0.995 which implies that there is strongly positive linearly correlation which is also significant between asset-liability and solvency margin. The analysed data showed that there is significant relationship between asset-liability management and a weak relationship between the liabilities of the companies and their solvency margin. This has a direct impact on the performance of the companies and by extension their abilities to meet their general obligations. Also the result from the t-statistics also reveals that the null hypothesis that the null hypothesis stating that poor asset liability management will not affect the ability of insurance companies in complying with their statutory duty on solvency margin should be rejected. 

Keywords

Asset Liability Insurance Management Solvency

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How to Cite

N, J. M., & Feyisayo, O. F. (2024). Effects of assets liability management on the solvency margin of insurance companies in Nigeria. Bayero University Journal of Finance, 1(2), 76-86. https://doi.org/10.67894/bjf.2024.3wv0y621

J. M. N, and O. F. Feyisayo, "Effects of assets liability management on the solvency margin of insurance companies in Nigeria," Bayero University Journal of Finance, vol. 1, no. 2, pp. 76-86, December 2024. doi: 10.67894/bjf.2024.3wv0y621

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