Credit Appraisal Practices and Financial Performance of Insurance Companies Listed in Nairobi Securities Exchange, Kenya
DOI:
https://doi.org/10.47604/ijfa.3733Keywords:
Credit Appraisal Practices, Financial Performance, Insurance CompaniesAbstract
Purpose: This study aimed to investigate the effect of credit appraisal on the financial performance of insurance companies listed on the Nairobi Securities Exchange. The study was anchored on the 5 C’s Model of Client Appraisal theory.
Methodology: The study was carried out using a descriptive research design. The study involved secondary information in a graphic report plan. Five years (2020-2024) were utilized to gather secondary data from the six insurance companies listed on NSE. Data analysis was performed utilizing SPSS version 25.
Findings: The study found that the average credit grew significantly during the period between 2020 and 2024. The EBITDA of the studied insurance companies exhibited a robust upward trajectory, nearly doubling from 2020 to 2024. The study found that the total amount of credit disbursed increased steadily between 2020 and 2024, indicating an increase in lending activity. The credit disbursement ratio stayed steady, suggesting that credit and premiums have a steady relationship. The study concluded that there was a significant positive relationship between credit appraisal and financial performance.
Unique Contribution to Theory, Practice and Policy: The study recommends that the listed insurance companies in Kenya can rely on credit appraisal as a credit control practice to improve their financial performance.
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