DETERMINANTS OF MARKET VALUE OF LISTED INSURANCE FIRMS IN NIGERIA

Nigeria with an estimated population of over 200 million people has enormous potentials to have the highest insurance penetration and density among its African contemporaries. However, the Nigerian insurance sector is still at infant stage and far behind its African peers judging by key indicators. It is on this backdrop; this study examines the determinants of market value of listed insurance firms in Nigeria. The specific objectives were to identify the effect of underwriting risk, liquidity, and firm size on price to book value ratio of listed insurance firms in Nigeria. The study employed ex-post facto research design, a population of 24 listed insurance firms from which a sample size of 14 was obtained using purposive sampling technique. Descriptive statistics, correlation analysis, and panel regression analysis with the aid of E-view 12 version were used to carry out the analysis. The findings revealed that underwriting risk and liquidity have a negative and non-significant effect on price to book value ratio of listed insurance firms in Nigeria. However, firm size exerts a negative and significant influence on price to book value of listed insurance firms in Nigeria. The study concluded that underwriting risk, liquidity and firm size are negative determinants of market value of listed insurance firms in Nigeria. Hence, the study recommends that the management of listed insurance firms in Nigeria should manage their assets effectively by ensuring they generate maximum return for every asset they are carrying in order to increase the market value.