Browsing by Author "Zinyoro, Tafadzwanashe"

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    Insurer performance and its determinants : evidence from selected African countries
    (Stellenbosch : Stellenbosch University, 2023-12) Zinyoro, Tafadzwanashe; Aziakpono, Meshach Jesse; Stellenbosch University. Faculty of Economic and Management Sciences. Dept of Business Management.
    ENGLISH SUMMARY: The insurance industry is a vital component of the financial sector, playing a crucial role in promoting financial stability for individuals, households, and firms, supplementing and complementing government security programmes, facilitating trade and commerce, mobilising national savings, encouraging loss mitigation, enabling efficient risk management, and fostering capital allocation efficiency. Therefore, it is imperative to assess the performance of insurance firms, as their contribution in the economy depends on their efficiency, innovation, and productivity. Against this backdrop, this thesis examines the efficiency, productivity, and innovation of life and non-life insurance companies in selected African countries over the period 2012—2017. The study specifically focuses on the Nigerian and South African life insurance markets, as well as the Kenyan, Nigerian, and South African non-life insurance markets. The choice of countries was influenced by the availability of consistent and comparable data. The thesis comprises three systematic literature reviews and four empirical chapters. The first literature review chapter provides a broad overview of studies on the performance of insurance companies. The second literature review chapter focuses on studies that explored the drivers of life insurer performance, while the last review chapter concentrates on studies that examined the determinants of non-life insurer performance. These three literature review chapters considered studies published between I January 1990 and 31 December 2021. The first empirical chapter evaluates the dynamic efficiency, productivity, and innovation of life insurers in Nigeria and South Africa using dynamic network meta frontier data envelopment analysis. The findings from this chapter reveal that South African life insurers outperformed their Nigerian counterparts in terms of overall efficiency, risk pooling, and investment of 0.367 compared to 0.006 for Nigeria, and their risk pooling efficiency was 0.756 compared to 0.433 for Nigeria. Additionally, South African life insurers had an investment efficiency score of 0.486 compared to 0.051 for Nigerian insurers. The study also indicates that both market perform better in risk pooling activities than in investment activities, suggesting that firms in these countries should focus on improving investment performance before concentrating on risk pooling performance. Furthermore, the study finds that South African life insurers utilize the best available technology compared to Nigerian life insurers, implying that Nigerian insurance companies should adopt new technologies to enhance their competitiveness and performance. In terms of overall productivity, the results show that Nigerian insurers progressed by 5.50 0 per year, while South African insurers regressed by 8.30 0 per year. The progression (regression) in overall productivity experienced by Nigerian (South African) firms is mainly attributed to the progression (regression) in investment productivity. Nigerian life insurers were productive in both production stages, while South African life insurers experienced a decline in productivity in both stages. These findings suggest that although South African life insurers were generally to overall productivity. The findings imply that Kenyan insurers should focus on enhancing their investment performance, while Nigerian films should concentrate on improving their risk pooling performance. Kenyan non-life insurance firms ranked first in overall, risk pooling, and investment technologies, whereas Nigerian non-life insurers experienced a decline in overall and risk pooling technological leadership, albeit experiencing a positive change in investment technology. South African insurers maintained their position in overall, risk pooling, and investment technological leadership changes. The third empirical chapter used fractional regression analysis to investigate the drivers of life insurer efficiency and innovation in the Nigerian and South African markets. The study found that firm size, capitalization, interest rates, and per capita GDP growth are key drivers of innovation and efficiency in Nigeria, while company size, capitalization, ownership, affiliation, reinsurance, and per capita GDP growth emerged as the major determinants of efficiency and innovation in South Africa. The findings suggest that mergers and acquisitions could benefit the South African market but may potentially harm the Nigerian market. Additionally, the study highlights the importance of regulatory oversight to ensure adequate capitalization of the insurance industry. The final empirical chapter also applied fractional regression analysis to examine the determinants of efficiency and innovation in the non-life insurance sector. The results show that firm size, group affiliation, capitalization, reinsurance, inflation, interest rate, GDP growth, interest rate, and sector development are the plima1Y factors affecting efficiency and innovation in Kenya. In Nigeria, the study found that firm size, ownership, capitalization, reinsurance, GDP growth, concentration, interest rate, and non-life insurance penetration are the key drivers of efficiency and innovation during the observation period. In South Africa, the findings show that ownership, group affiliation, and reinsurance are the most important factors influencing efficiency, while firm size, group affiliation, capitalization, reinsurance, interest rate, and non-life insurance penetration are the significant innovation drivers. The results for the three markets suggest that non-life insurers overutilise scale, capital, and reinsurance. Therefore, managers should reduce operational scale and choose optimal capital and reinsurance programs. Additionally, the chapter highlights the significance of government policies that support economic growth and stability, particularly in Kenya and Nigeria. Moreover, policymakers and regulators should not view indust1Y concentration as anti-competitive. Overall, the findings suggest that technical training in underwriting, claims, actuarial, and investment management is necessa1Y for effective management, and that regulators and policymakers should provide technical support to the insurance indust1Y to improve its performance.