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Impact of Market Risk Exposure on Investment Performance of Nigerian Insurance Firms

Ipigansi, Pretoria, Aduloju, Sunday Adekunle

Abstract

This study examined the impact of market risk exposure on the investment performance of Nigerian insurance firms, with specific emphasis on interest rate risk, foreign exchange risk, and inflation risk. The study utilised secondary data covering a period of twenty-six years from 2000 to 2025, resulting in a sample size of twenty-six observations. An ex post facto research design was adopted, while data were analysed using descriptive statistics, unit root tests, Johansen cointegration test, and Vector Error Correction Model. The findings revealed that interest rate risk exposure has a positive and statistically significant effect on investment yield, while foreign exchange risk and inflation risk have no significant short run impact. However, the cointegration results confirmed the existence of a long run relationship among the variables. The error correction mechanism indicated a high speed of adjustment towards equilibrium. The study concluded that interest rate risk is the most significant determinant of investment performance in Nigerian insurance firms. It was recommended that firms adopt effective interest rate risk management strategies, strengthen risk monitoring systems, and that regulators enforce policies to enhance risk management practices in the sector.

Keywords

Market risk exposureinvestment yieldinterest rate riskforeign exchange riskinflation riskinsurance firmsNigeriainvestment performance

References

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