The Impact of Cash Flow Management on the Insurance Industry (a Case Study of Aicco Insurance)
CHAPTER ONE
Objectives of the study
This research is aimed at evaluating the impact of cash flow management in the insurance industry. To be concise, these objectives are:
- To identify whether cash flow management have any significant impact on insurance industry.
- To assess the important of cash flow management on Aicco Insurance
- To ascertain the how effective is cash flow management in Aicco Insurance
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
There are plethora of studies that have examined the relationship between cash flow and firm performance both in developed and developing countries and such studies include Khoshdel (2006); Ashitiani (2005), Miar (1995); Shahmoradi (2002), Bingilar and Oyadonghun (2014), Nwokoye and Ogbeide (2015), Watson (1955); Amuzu (2010), Chikaghi (2013). The empirical findings from these studies are mixed and inconclusive, thus necessitating a further re-examination of the subject matter. For example, Zhou, Yang and Zhang (2012) report shows that there is a negative relationship between cash flow and firm performance in China. Ali, Alireza and Jala (2013) study revealed that company’s performance and cash flow have a significant negative relationship. The study of Ashitam (2005), shows that the relationship between operating cash flows, investments, financing and stock return, a proxy for financial performance in Tehran Stock Exchange are insignificant and negatively correlated. Nwanyanwu (2015) investigates the association between cash flow and organizational performance in hospitality and print media in industry in Nigeria. Data were collected through questionnaire. The analyses were performed by means of descriptive statistics and Pearson product moment coefficient of correlation. The result indicates a statistically significant strong positive relationship between cash flow position and net profit. They concluded that cash flow position determines the extent of net profit performance of organizations in the hospitality and print media. Ogbonnaya, Ekwe and Uzoma (2016) examined the relationship between cash flow and financial performance of listed banks in emerging economies using Nigeria as an example. The data were obtained from the annual report and accounts of the selected banks. The data were subjected to statistical analysis using correlation technique. The result they obtained showed that operating cash flow has a significant and strong positive relation with performance in the banking sector in Nigeria. Duru, Okpe and Chitor (2015) determined the effect of cash flow statement on company’s performance of food and beverages companies in Nigeria. Data were obtained from the annual reports and accounts of six (6) companies sampled for the study. The data were analyzed using multivariate regression technique. The result revealed that operating and financing cash flows have significant positive effect on corporate performance in the food and beverages sector in Nigeria.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the Impact Of Cash Flow Management On The Insurance Industry. The Aicco Insurance forms the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
TEST OF HYPOTHESIS
Ho: Cash flow management has no significant impact on insurance industry.
Hi: Cash flow management has significant impact on insurance industry.
Ho: there is no important of cash flow management on Aicco Insurance
Hi: there is an important of cash flow management on Aicco Insurance.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain The Impact Of Cash Flow Management On The Insurance Industry (A Case Study Of Aicco Insurance). In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of Cash Flow Management On The Insurance Industry
Summary
This study was on the Impact Of Cash Flow Management On The Insurance Industry (A Case Study Of Aicco Insurance). Three objectives were raised which included: To identify whether cash flow management have any significant impact on insurance industry, to assess the important of cash flow management on Aicco Insurance and to ascertain the how effective is cash flow management in Aicco Insurance. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Aicco Insurance. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Cash flow is a major concern that every managers watch out for carefully so as to achieve a stated objective. A negative cash flow spells out insolvency and financial crisis, particularly for insurance firms. This is because without cash, it is prettily difficult to efficiently operate the business, meet their obligations as at when due, expand operation and maximize wealth of the shareholders. The results of this study have showed that cash flow is a major determinant of the financial performance of insurance firms in Nigeria. Size does not increase financial performance of insurance firms. What is required to operate optimally is efficiency in the cash flow generation. A lot of insurance companies have liquidated due to the inability to meet financial obligations to the customers majorly occasioned by insufficient cash flows. This has engender moral hazard and adverse selection in the insurance sector in Nigeria
Recommendation
It is therefore recommended that there has to be adequate policy thrust by CBN, making it mandatory for insurance companies in Nigeria to maintain persistent increase in cash reserve. The level and strength of corporate governance need to be monitored by the Apex bank. The managers in insurance firm should regularly change the extent of the cash outflows under each activity to avoid negative cash flow position as well as financial crisis. Adequate investment appraisal is really a concern that insurance firms need to take into consideration when customers are taking up insurance coverage. The costs have to be weighed against the benefits accruable therefore.
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