ABSTRACT

Insurance services are now being integrated into wider financial industry and the insurance sector plays an important role in service based economy of Nigeria. Profitability is one of the most important objectives of fInancial management because one goal of financial management is to maximize the owner's wealth and profitability is very important determinants of performance. This study examined the effects of firm internal factors proxy by size of company, leverage, loss ratio, underwriting risk, management expense ratio, tangibility of assets, liquidity and premium growth on profitability of insurance companies listed on the Nigerian Stock Exchange proxy by return on assets. A key indicator of insurance companies profitability is return on assets (ROA), defined as the before tax profit divide by total assets (TA). Profitability is dependent variable while size of company, leverage, loss ratio, underwriting risk, management expense ratio, and tangibility of assets, liquidity and premium growth are independent variables. The main objective of this study is to determine the firm internal/actors influencing the profitability of the insurance companies listed on the Nigerian Stock Exchange. The main objective of this study will be achieved by establishing the effect of the identified fIrm internal factors on the profitability of insurance companies listed on the Nigerian Stock Exchange. The study adopted a descriptive research design and a census study qf 28 listed insurance companies on the Nigerian Stock Exchange was studied. Secondary data were obtained from the financial statements of insurance companies. The study was quantitative in nature. Regression model was used to analysis the secondary data collected for the insurance companies. The findings from the test of hypotheses show that there is significant relationship between profitability proxy by return on total assets, and management expense ratio, tangibility of assets and liquidity. It was also found that leverage ratio, liquidity ratio, management expense ratio and tangibility of assets are suitable determinants of the profitability of insurance companies listed on the Nigerian Stock Exchange. The study recommends that in order. for insurance companies to increase their profitability, the companies should work towards improving the management expense ratio, tangibility of assets, liquidity and leverage to increase their profits. Higher profits would mean better reserves which would assist the insurer to operate in times of large unexpected claims and also help them maintain liquidity at all times.