Relationship between investments and performance of insurance companies listed on the Nairobi Securities Exchange

A business that is not profitable cannot survive and the management of a company‘s investments is an essential function of this profitability, which directly affects shareholder value. This study aimed at identifying the relationship between investments and performance of listed insurance companies on the Nairobi Securities Exchange (NSE). The study examined investments in properties, associates, government bonds and commercial bonds as a ratio to total assets. Performance of the listed insurance companies was measured by return on investment (ROE) which was calculated as net profit after tax divided by net assets. Secondary data that was obtained by document review was used. The data was analyzed using statistical package for social science (SPSS). Descriptive statistics, correlation analysis and regression analysis were carried out on the extracted data and the results showed that investments in properties had a positive relationship with performance of listed companies on the NSE while investments in associates, government bonds and commercial bonds had a negative relationship with performance. The general results indicated a positive relationship between investments and performance as measured by ROE of listed insurance companies in Kenya. In view of the findings, the researchers recommend that listed insurance companies should invest more in properties for the benefit of equity holders.