Titus Tilu Maseki, James N. Kung’u, John W. Nderitu


Insurance businesses are designed to pool and accumulate large sums of money in order to settle claims arising from their clients in the event of loss. The companies venture into stock trading, underwriting ventures and property investments in addition to their core activities of generating income from net premiums. Several factors influence the operation results of these firms. The study used descriptive research design where a sample of thirty six (36) respondents was chosen through stratified sampling. Questionnaires were administered through drop and pick method. Both descriptive and inferential statistics were analysed. Inferential analysis failed to accept the null hypotheses that there was no statistically significant influence of selected factors; risk perception, macroeconomics and investment portfolio choice on financial performance of insurance companies. The results of the study indicated that considered in isolation risk perception explained 19.6% of the variability in financial performance while macroeconomic and investment portfolio choice factors accounted for 18.2% and 15.9% respectively of the changes in financial performance. The joint independent variables were associated to 74.9% of the variability in financial performance of insurance firms. However, there are other factors that explain the variance of financial performance of insurance companies in Kenya that were not included in the model.


JEL: G10; G22; G23


Article visualizations:

Hit counter



risk perception, macroeconomics, investment portfolio choice, financial performance

Full Text:



Allen, D., W. & Evans, A., D. (2005).The bidding and overconfidence in experimental financial markets. Journal of Behavioral Finance, 6(3),108-120

Barberis, N., Huang, M., & Santos, T. (2001). Prospect theory and asset prices. Quarter Journal of Economics, 116, 1-53.

Bartlett, J. E., Kotrlik, J. W., & Higgins, C. C. (2001). Organizational research: determining appropriate sample size in survey research. Information Technology, Learning and Performance Journal, 19(1), 43-50. Retrieved August 6th, 2018

Basu, S. (1977). Investment performance of equity stocks in relation to their price-earnings ratio. A Test of Efficient Market Hypothesis, 32, 663-682.

Battauz, A., De Donno, M., & Sbuelz, A. (2009). Risk tolerance level for insurance companies, 289-300.

Bennet, E., Selvam, M., Vivek, N., & Shalin, E. (2012). The impact of investors’ sentiment on equity market: evidence from the Indian stock market.

Bernstein, P. L. (1996). Against the gods: The remarkable story of risk. New York, USA: John Wiley & Sons.

Bodie, Z., Kane, A. & Marcus, J. (2009). Investments. New York, USA: McGraw Hill.

Brennan, T., Lo, A. & Nguyen, T. (2007). Portfolio theory. A Review to Appear in Foundations of Finance.

Burca, M. & Batrinca, G. (2014). The determinants of financial performance in the Romanian insurance market. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1), 299-308.

Camerer, C. & Lovallo, D. (1999). Overconfidence in excess entry: an experimental approach. American Economic Review, 89(1), 306-318.

Fama, E. (1965). The Behavioural of stock market prices. Journal of Business, 38, 34-105.

Gatsi, J. G. & Gadzo, S. G. (2013). Firm level and macroeconomic effects on financial performance of insurance companies in Ghana. International. Journal of Business Administration and Management, 3(1), 1-9.

Gregory, A., Matatko, J. & Luther, R. (1997). Ethical unit trust financial performance: small company effects and fund size effects. Journal of Business Finance and Accounting, 24(5), 705-725.

Hellman, T. & Puri, M. (2000). The interaction between product market and financing strategy: the role of venture capital. Review of Financial Studies, 13(4), 959-984.

Hendricks, C. & Patel, S. (2012). Investments in mutual funds. The Journal of Business, 57(1), 134-137.

Hou, T. C.-T. (2012). Return persistence and investment timing decisions in Taiwanese domestic equity mutual funds. Managerial Finance, 38(9), 873-891.

Kahneman, D. & Tversky, A. (1979). Prospect theory: an analysis of decision making under risk. Econometrica, 47(2), 263-291.

Kamanda, N. S. (2000). An empirical evaluation of equity portfolio held by insurance companies in Kenya. Unpublished MBA Project, UON.

Kamwaro, E. K. (2013). The impact of investment portfolio choice on financial performance of investment companies in Kenya. Un-Published Journal, UON.

Karimi, D. (2013). Relationship between investment portfolio choice and profitability of investment companies listed in the Nairobi Securities Exchange. Unpublished Project, Kenyatta University.

Murumba, K. (2012). Performance measures for mutual funds’ performance. An emphirical review. Unpublished project UON.

Mwangi, G. (Summer 2017). Effects of macroeconomic variables on financial performance of insurance companies in Kenya. Unpublished Research Project, USIU-Africa.

Ndung'u, N. (2012). Developments in Kenya's insurance industry sector. Launch of Continental Reissurance Brand and Products. Nairobi Office, Nairobi.

Njiiri, V. (2015). the relationship between investment and financial performance of insurance companies in Kenya. Un-published Research Project, UON.

Nofsinger, J., & Sias, R. (1999). Herding and feedback trading by institutional and individual investors. Journal of Finance, 54(6), 2263-2295.

Odean, T. & Oslen, R. (1998). Behavioral finance and its implications for stock prices volatility. Financial Analysts Journal, 54(2), 10-18.

Omisore, I., Yusuf, M., & Nwufo, C. (2012). The modern portfolio theory as an investment decision tool. Journal of Accounting and Taxation, 4(2), 19-28.

Oyatoye, E. O. & Arilesere, W. O. (2012). A non linear programming model for insurance company investment portfolio management in Nigeria. International Journal of Data Analysis Techniques and Strategies 2012, 4(1), 83-100.

Pi, M. & Timme, S. (1993). A study of monthly fund returns and performance evaluation techniques. Journal of Financial and Quantitative Analysis, 29(3), 419-444.

Plous, S. (1993). The psychology of judgement and decision making. New York, USA: McGraw-Hill Inc.

Sharpe, W. F. (1963). A Simplified model for portfolio analysis. Management Science, 9(2), 277-293.

Shikuku, C. (2014). The effect of behavioral factors on individual investor choices at the Nairobi securities exchange. Unpublished MBA Project, UON.

Shiller, R. (1984). Stock price and social dynamics. Brookings Papers in Economic Activity, 2, 457-498.

Shukla, R. K. & Van Inwegen, G. B. (1995). Do locals perform better than foreigners? an analysis of UK and USA mutual fund managers. Journal of Economics and Business, 47(3), 241-254.

Thaler, R. H. (1974). The value of saving a life: a market estimate. PhD Thesis, University of Rochester.

Veronesi, P. (1999). How does information quality affect stock returns? Results from a dynamic model of learning, "CRSP Working Paper". Journal of Finance, 462.

Wani, A. A. & Showket, A. D. (2015). Relationship between financial risk and financial performance: an insight of Indian insurance industry. International Journal of Science and Research, 4(11), 1424-1433.

Zarnowitz, V. (1992). Business cycles: theory, history, indicators and forecasting. Chicago, USA: The University of Chicago Press.



  • There are currently no refbacks.

Copyright (c) 2019 Titus Tilu Maseki, James N. Kung’u, John W. Nderitu

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.

Copyright © 2016 - 2023. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing GroupAll rights reserved.

This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and  Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.