EFFECT OF FINANCIAL RISK ON THE PROFITABILITY OF NON-LIFE INSURANCE COMPANIES IN NIGERIA

The purpose of this paper was to examine some of the financial risk variables that affect the profitability of Non-life insurance companies listed on Nigerian Stock Exchange. A panel research design was employed for the purpose of this study. The reason for employing this design was because the study has to do with secondary data that cut across a large population and have occurred at different point in time. This was considered suitable and appropriate for a study on Non-life insurance companies that have similar characteristics. The data was collected and analyzed after which the study established that financial risks affect the profitability of Non-life insurance companies in Nigeria. Specifically, solvency risk, leverage risk, and reinsurance risk affected the profitability (ROA) of Non-life insurance companies in Nigeria between 2008-2018. While affiliated investment risk and firm size risk did not affect the profitability of insurance companies within that same period. The findings indicated a number of implications for both the owners of insurance companies as well as the regulators of the industry. Insurance companies are saddled with the responsibility of mitigating all sort of risks that are faced by individuals and organizations hence, owners of insurance companies should pay careful and particular attention to those financial risk variables that are likely to affect their own corporate profitability. The regulators of the insurance industry in Nigeria should formulate policies that will help in enhancing the profitability of the insurance industry