Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda

Wilson Bashaija

doi:doi:10.11648/j.jfa.20221005.15

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Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda

Wilson Bashaija

Published in Journal of Finance and Accounting (Volume 10, Issue 5)

Received: 12 April 2022 Accepted: 27 May 2022 Published: 27 October 2022

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Abstract

Financial risks, cover credit, liquidity, and operational risks, are the risks which Insurance face during their operations and all these risks have severe impact on the profitability of Insurance companies. Insurance businesses, agents, and brokers face numerous problems in less developed cultures where political and socioeconomic systems are still in flux. The study's goal is to examine the impact of Claims Management Policies on the financial performance of Rwandan insurance companies, as well as the impact of working capital management on the financial performance of Rwandan insurance companies. The research design was based on the Theory of Financial Distress. The research used a descriptive research design that included quantitative and qualitative methods. The study adopted target population of 60 and multi-level random sampling of 45. Survey data was collected by use of a structured questionnaire. The data obtained was analysed using both qualitative and quantitative analysis. The results showed that the total model had a significant F statistic of 5.976, which was greater than the essential F value of 3.88 with (1, 219) degrees of freedom at the P = 0.05 level of significance. The F-p statistic's value was more than 0.05, indicating that the coefficient in the fitted equation was not equal to zero, implying a good fit. This implied that considering the simple regression fitted, working capital management had a little effect on ROE. The study recommended that the insurance companies should maintain optimal capital structure and ensure that the companies fully utilize their debt facility according to their capabilities. Financial managers should increase investment in working capital by extending the days in the time for the average payment period so that they can also improve the profitability of the firms.

Published in	Journal of Finance and Accounting (Volume 10, Issue 5)
DOI	10.11648/j.jfa.20221005.15
Page(s)	230-237
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Financial Risk, Financial Performance, Insurance Companies in Rwanda

References

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APA Style

Wilson Bashaija. (2022). Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda. Journal of Finance and Accounting, 10(5), 230-237. https://doi.org/10.11648/j.jfa.20221005.15

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ACS Style

Wilson Bashaija. Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda. J. Finance Account. 2022, 10(5), 230-237. doi: 10.11648/j.jfa.20221005.15

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AMA Style

Wilson Bashaija. Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda. J Finance Account. 2022;10(5):230-237. doi: 10.11648/j.jfa.20221005.15

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@article{10.11648/j.jfa.20221005.15,
  author = {Wilson Bashaija},
  title = {Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda},
  journal = {Journal of Finance and Accounting},
  volume = {10},
  number = {5},
  pages = {230-237},
  doi = {10.11648/j.jfa.20221005.15},
  url = {https://doi.org/10.11648/j.jfa.20221005.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20221005.15},
  abstract = {Financial risks, cover credit, liquidity, and operational risks, are the risks which Insurance face during their operations and all these risks have severe impact on the profitability of Insurance companies. Insurance businesses, agents, and brokers face numerous problems in less developed cultures where political and socioeconomic systems are still in flux. The study's goal is to examine the impact of Claims Management Policies on the financial performance of Rwandan insurance companies, as well as the impact of working capital management on the financial performance of Rwandan insurance companies. The research design was based on the Theory of Financial Distress. The research used a descriptive research design that included quantitative and qualitative methods. The study adopted target population of 60 and multi-level random sampling of 45. Survey data was collected by use of a structured questionnaire. The data obtained was analysed using both qualitative and quantitative analysis. The results showed that the total model had a significant F statistic of 5.976, which was greater than the essential F value of 3.88 with (1, 219) degrees of freedom at the P = 0.05 level of significance. The F-p statistic's value was more than 0.05, indicating that the coefficient in the fitted equation was not equal to zero, implying a good fit. This implied that considering the simple regression fitted, working capital management had a little effect on ROE. The study recommended that the insurance companies should maintain optimal capital structure and ensure that the companies fully utilize their debt facility according to their capabilities. Financial managers should increase investment in working capital by extending the days in the time for the average payment period so that they can also improve the profitability of the firms.},
 year = {2022}
}

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TY - JOUR
T1 - Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda
AU - Wilson Bashaija
Y1 - 2022/10/27
PY - 2022
N1 - https://doi.org/10.11648/j.jfa.20221005.15
DO - 10.11648/j.jfa.20221005.15
T2 - Journal of Finance and Accounting
JF - Journal of Finance and Accounting
JO - Journal of Finance and Accounting
SP - 230
EP - 237
PB - Science Publishing Group
SN - 2330-7323
UR - https://doi.org/10.11648/j.jfa.20221005.15
AB - Financial risks, cover credit, liquidity, and operational risks, are the risks which Insurance face during their operations and all these risks have severe impact on the profitability of Insurance companies. Insurance businesses, agents, and brokers face numerous problems in less developed cultures where political and socioeconomic systems are still in flux. The study's goal is to examine the impact of Claims Management Policies on the financial performance of Rwandan insurance companies, as well as the impact of working capital management on the financial performance of Rwandan insurance companies. The research design was based on the Theory of Financial Distress. The research used a descriptive research design that included quantitative and qualitative methods. The study adopted target population of 60 and multi-level random sampling of 45. Survey data was collected by use of a structured questionnaire. The data obtained was analysed using both qualitative and quantitative analysis. The results showed that the total model had a significant F statistic of 5.976, which was greater than the essential F value of 3.88 with (1, 219) degrees of freedom at the P = 0.05 level of significance. The F-p statistic's value was more than 0.05, indicating that the coefficient in the fitted equation was not equal to zero, implying a good fit. This implied that considering the simple regression fitted, working capital management had a little effect on ROE. The study recommended that the insurance companies should maintain optimal capital structure and ensure that the companies fully utilize their debt facility according to their capabilities. Financial managers should increase investment in working capital by extending the days in the time for the average payment period so that they can also improve the profitability of the firms.
VL - 10
IS - 5
ER -

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Author Information

Wilson Bashaija

Department of Finance, Faulty of Accounting and Finance, University of Kigali, Kigali, Rwanda

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Plain Text BibTeX RIS

APA Style

Wilson Bashaija. (2022). Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda. Journal of Finance and Accounting, 10(5), 230-237. https://doi.org/10.11648/j.jfa.20221005.15

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ACS Style

Wilson Bashaija. Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda. J. Finance Account. 2022, 10(5), 230-237. doi: 10.11648/j.jfa.20221005.15

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AMA Style

Wilson Bashaija. Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda. J Finance Account. 2022;10(5):230-237. doi: 10.11648/j.jfa.20221005.15

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@article{10.11648/j.jfa.20221005.15,
  author = {Wilson Bashaija},
  title = {Effect of Financial Risk on Financial Performance of Insurance Companies in Rwanda},
  journal = {Journal of Finance and Accounting},
  volume = {10},
  number = {5},
  pages = {230-237},
  doi = {10.11648/j.jfa.20221005.15},
  url = {https://doi.org/10.11648/j.jfa.20221005.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20221005.15},
  abstract = {Financial risks, cover credit, liquidity, and operational risks, are the risks which Insurance face during their operations and all these risks have severe impact on the profitability of Insurance companies. Insurance businesses, agents, and brokers face numerous problems in less developed cultures where political and socioeconomic systems are still in flux. The study's goal is to examine the impact of Claims Management Policies on the financial performance of Rwandan insurance companies, as well as the impact of working capital management on the financial performance of Rwandan insurance companies. The research design was based on the Theory of Financial Distress. The research used a descriptive research design that included quantitative and qualitative methods. The study adopted target population of 60 and multi-level random sampling of 45. Survey data was collected by use of a structured questionnaire. The data obtained was analysed using both qualitative and quantitative analysis. The results showed that the total model had a significant F statistic of 5.976, which was greater than the essential F value of 3.88 with (1, 219) degrees of freedom at the P = 0.05 level of significance. The F-p statistic's value was more than 0.05, indicating that the coefficient in the fitted equation was not equal to zero, implying a good fit. This implied that considering the simple regression fitted, working capital management had a little effect on ROE. The study recommended that the insurance companies should maintain optimal capital structure and ensure that the companies fully utilize their debt facility according to their capabilities. Financial managers should increase investment in working capital by extending the days in the time for the average payment period so that they can also improve the profitability of the firms.},
 year = {2022}
}

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