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WORKING CAPITAL MANAGEMENT IN INSURANCE FIRMS: A CASE STUDY OF SELECTED INSURANCE COMPANIES IN NIGERIA.
ABSTRACT
The management of working capital in insurance firms was undertaken using three
selected companies as a case study, namely: Guinea Insurance Plc; UNIC Insurance
Pic; and First Nigerian Insurance Company Ltd.
The work was guided by the following hypothesis:
(i) That Insurance companies can accurately quantify the amount of
premiums and claims in a given accounting period,
(ii) That the management of accounts receivable under the current liquidity
squeeze is determined largely by external factors,
(iii) That there is a growing trend of diversification of investment of current
assets by insurance firms.
Data collected, using personal interview and questionnaire and ratio analysis of
the selected companies for a period of four years were used to test the hypothesis.
The results obtained show that it is possible to accurately quantify the amount
of premiums and claims in a given accounting period. It also revealed some difficulties
with the collection of premiums, the low values of accounts receivables ratios obtained
for these companies confirmed this. It was also discovered that insurance companies
are not diversifying their investments as such, rather, they are increasing their levels
of investments in marketable securities. This work therefore confirms two of the three
hypothesis.
Finally, the following recommendations were made:
(i) New Methods and Strategies that will enhance the collection of premiums
should be developed and in addition, incentives can be introduced to
encourage regular payment of premiums,
(ii) The period of claims settlement should be shortened and some of the
rigours policy holders undergo before getting their claims should be
eliminated,
(iii) The level of expenses on premium is very high, something should be
done to reduce it.
(iv) Lastly, other avenues of investing idle cash other than bank deposit and
securities should be exploited.
TABLE OF CONTENT
Title page- – – – – – – – – i
Approval page – – – – – – – -ii
Dedication – – – – – – – – -iii
Acknowledgement – – – – – – – -iv
Abstract – – – – – – – – – -v
Table of content – – – – – – – -vi
CHAPTER ONE
INTRODUCTION – – – – – – – -1
1.0 Background of the study – – – – -1
1.1 Statement of the problem – – – – -5
1.2 Purpose of the study – – – – – -6
1.3 Significance of the study – – – – -8
1.4 Research questions – – – – – -9
1.5 Scope of the study – – – – – – -10
CHAPTER TWO
LITERATURE REVIEW – – – – – – -11
CHAPTER THREE
Research methodology – – – – – – -39
Design of study – – – – – – – -40
CHAPTER FOUR
Presentation, analysis and interpretation of data – -48
CHAPTER FIVE
Summary of findings – – – – – – -60
Conclusion – – – – – – – – -61
Recommendations – – – – – – – -62
Suggestions for further research – – – – -64
References – – – – – – – – -65
Appendix I – – – – — – – – -68
Questionnaire. – – – – – – – -69
