Equity Investments and Financial Performance of Insurance Companies in Kenya

Purpose: Insurance firms are financial institutions that are important to the effective deployment of capital as well as the mobilization of contractual savings. The funds that insurance companies raise for their investments comes from insurance premiums. To optimize the utility of the assets they invest in, it is necessary to create a methodical and logical way of assessing investment alternatives. Nonetheless, a number of factors influence investment alternatives. The study sought to establish the effects of equity investment on financial performance of insurance companies in Kenya. Methodology: The study applied causal research design in all the 55 insurance firms in Kenya. Census study was conducted for a period of 10 years between 2014 and 2023.Secondary data from IRA publications as well as the companies’ websites. Panel regression analysis correlation analysis and diagnostic tests were employed to analyze data and test the hypothesis. Findings: From the results, equity investment revealed beta values of 0.50041 and p-value 0.000, Panel regression results revealed a positive and significant effect between equity investment and financial performance of insurance firms in Kenya. Unique Contribution to Theory, Practice and Policy: Based on the findings and conclusions, the study recommended that insurance companies to think about investing in other developing nations with thriving capital markets in order to increase their financial performance. By doing this, the companies will be able to take advantage of market possibilities and reduce their vulnerability to shifts in local markets. The recommendations of the study to the Capital Markets Authority was to rely on the findings of the study when developing benchmark guidelines on the minimum holding on various investment alternatives and to develop new policies to guide the assets management within the insurance industry to ensure that public funds are well-protected and the firms achieve value on their returns.