INFLATION RISK AND THE PERFORMANCE OF FIRMS IN THE NIGERIA INSURANCE SUB-SECTOR
This study empirically examines the nexus between inflation risk and the performance of insurance firms in Nigeria using annual time series data that covers the period 1986-2022. Net profit as ratio of total assets of insurance firms was used as a performance measure, which is the dependent variable and is regressed on inflation risk and other control variables (investment by insurance firms, growth rate of nominal GDP, firm size and external vulnerability). The Ordinary Least Squares (OLS) econometric technique was utilized for the estimation of the model, after the preliminary examination of the variables using descriptive statistics. The empirical findings revealed a negative and significant relationship between inflation risk and performance of insurance firms in Nigeria at 5% level of significance. The study concludes that inflation risk remains a bane on the performance of insurance firms and could be deleterious to the overall economy. It is recommended that inflationary pressures be tamed to the barest minimum, and more importantly stabilized to reduce the risk of inflation uncertainty on insurance firms. Insurance firm-investment-enhancing policies through appropriate investment diversification, growth-stimulating measures and shock-mitigating policies and initiatives should also be implemented in order to enhance the performance of insurance firms in Nigeria. Keywords: Inflation Risk; Insurance; Performance; Inflationary; Macro-economy