FINANCIAL RISK MANAGEMENT AND FINANCIAL PERFORMANCE AMONG REGISTERED INSURANCE COMPANIES, KENYA
Kimacia Gitau - Ph.D. (Finance) Fellow, School of Business, Kenyatta University, Nairobi, Kenya
ABSTRACT
Insurance Industry Performance data by the Association of Kenya Insurers (2017) and the Insurance Regulatory Authority (2018) show that the insurance industry performance measures of Insurance penetration, return on equity and Return on Assets have been on the decline. Empirical studies show that that there is a significant relationship between financial performance and financial risk management. This has been shown by the effect of single indicators (credit risk, market risk, liquidity risk and operational risk) and financial risk collectively. This paper gives a background on financial risk management and financial performance and by reviewing other literature, it provides a theoretical and empirical review on the relationship between financial risk management and financial performance. The paper concludes that financial risk management is a key factor in the financial performance of a firm. The paper also provides a platform to fill the research gaps identified and generate an understanding as to if financial risk management has an effect on financial performance among registered insurance companies.
