Nexus of firm characteristics and financial performance of non-life insurance companies in the Southern African Development Community

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In almost all emerging and developed nations, the insurance industry is one of the most important participants of the financial services sector. As a result, the goal of this study is to investigate the firm characteristics and drivers of financial performance using 121 publicly traded non-life insurance companies from 16 Southern African Development Community (SADC) countries during the period from 2008 to 2019. The consolidated least squares and two-step generalized method of moments estimators were used to analyze a panel data set of 1,452 observations. The findings show that a lagged return on assets, equity capital, operational efficiency, leverage and investment capability are statistically significant determinants of financial performance in non-life insurance companies of SADC countries, even though equity capital, operational efficiency, and leverage are inversely significant. The insurance industry, policymakers, the state, and shareholders should consider these important variables when making decisions, and enhance their performance according to the findings. It is also suggested that the industry’s capital structures should be reformed to preserve a favorable balance of equity and debt amongst the businesses. Additionally, measures such as automated systems that may decrease operating costs should be used to improve financial performance.

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    • Figure 1. Conceptual model
    • Table 1. Variable definition and measurement
    • Table 2. Descriptive statistics
    • Table 3. Correlation analysis
    • Table 4. Regression analysis: OLS and two-step SYS-GMM
    • Conceptualization
      Thabiso Sthembiso Msomi
    • Data curation
      Thabiso Sthembiso Msomi, Celani Nyide
    • Formal Analysis
      Thabiso Sthembiso Msomi, Celani Nyide
    • Investigation
      Thabiso Sthembiso Msomi
    • Methodology
      Thabiso Sthembiso Msomi
    • Project administration
      Thabiso Sthembiso Msomi
    • Validation
      Thabiso Sthembiso Msomi, Celani Nyide
    • Visualization
      Thabiso Sthembiso Msomi, Celani Nyide
    • Writing – original draft
      Thabiso Sthembiso Msomi
    • Supervision
      Celani Nyide
    • Writing – review & editing
      Celani Nyide