Profitability of General Insurance Underwriters in Kenya: Does Firm Size Matter?
Mirie Mwangi

Abstract
The objective of the study was to determine the relationship between size and profitability of general insurance companies in Kenya. The study used an unbalanced panel of all general insurance companies in Kenya for the five year period 2012 to 2016 (the number ranged from 34 to 37). Regression analysis was used to relate size (proxied by log of total assets) against financial performance (ROA, ROE and then quarterly by size for ROE). Using ROA as a measure of profitability, the findings were that the effect of size on financial performance of general insurance companies in Kenya was insignificant. When performance was measured by ROE, the effect of size on profitability was significant and positive, but only explaining 3% of the variability in performance. Indeed, the effect of size on profitability (ROE) was not significant when the general insurance firms were partitioned into quarters, meaning that among similar sized companies, the size effect disappeared. Size therefore appears not to be a major determinant of profitability of general insurance companies in Kenya. Further research should be carried out to establish the reason why this is so.

Full Text: PDF