Table 4 above reveals an R 2 of 0.7157 which implies that the four independent variables studied explain only 71.6% of the variations in financial performance of insurance companies in Ghana. Consequently, this means that other factors not studied in this research explain 28.4% of the variations in financial performance of Ghanian insurance companies. ANOVA Results Table 5: ANOVA of the regression MODE L SUM OF SQUARES d f MEAN SQUARE F Sig 1 Regression 2.534 1 2 1.267 9.475 0.003 1 Residual 9.307 3 2 2.327 Total 11.841 4 4 The significance value is 0.0031 which is less than 0.05 thus the model is statistically significant in predicting how risk management practices affect the financial performance of insurance companies in Ghana. The F critical at 5% level of significance was 2.1646. Since F calculated is greater than the F critical (value = 9.475), this means that the overall model was significant, and hence, it is good for prediction.
Interpretation of the Results Table 6: Coefficient of determination MODEL UNSTANDARDIZED COEFFICIENTS STANDARDIZED COEFFICIENTS t Beta Std Error Beta 1 Constant 1.147 0.2235 5.132 Risk Identification 0.668 0.1102 0.1032 7.287 Risk assessment & measurement 0.348 0.1828 0.0937 4.685 Risk mitigation 0.454 0.2156 0.1178 4.626 Risk monitoring 0.398 0.3164 0.1425 3.418 Multiple regression analysis was conducted to determine the relationship between financial performance of insurance companies in Ghana and the four independent variables, that is, risk management practices. As per the SPSS generated table above, regression equation; (Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 + ε) becomes: (Y= 1.147+ 0.668X1+ 0.348X2+ 0.454X3+ 0.398X4 + ε) According to the regression equation established, taking all factors into account (risk identification, risk assessment, risk mitigation and risk monitoring) constant at zero, financial performance of insurance companies in Ghana will be 1.147. The data findings analysed also show that taking all other independent variables at zero, a unit increase in risk identification will lead to a 0.668 increase in financial performance, a unit increase in risk assessment and measurement will lead to a 0.348 increase in financial performance, a unit increase in risk mitigation will lead to a 0.454 increase in financial performance while a unit increase in risk management program implementation and monitoring will lead to a 0.398 increase in financial performance of insurance companies in Ghana.
This implies that risk identification contributes the most to the financial performance of insurance companies in Ghana followed by risk mitigation, risk management program implementation & monitoring and risk assessment & measurement in that order. At 5% level of significance and 95% level of confidence, risk identification, risk mitigation, risk management program implementation & monitoring and risk assessment & measurement all significantly influenced the financial performance of insurance companies in Ghana. Discussion of Findings From the study, it was established that most insurance companies in Ghana had been in operation for a long period of time, and a majority of these companies had a wide branch network throughout the country. The implication is that these are large companies and hence face greater levels of risk in their operations due to operating in larger scales.
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- Spring '20
- Dr. ASRAVOR