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THE NIGERIAN FINANCIAL SYSTEM: THE NEXUS BETWEEN REINSURANCE CEDED AND EQUITY FINANCING IN THE NON-LIFE INSURANCE SECTOR

Mfon Sampson Ukpong et al.

Facta Universitatas: Economics and Organization2025https://doi.org/10.22190/fueo250109007uarticle
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Weight
0.50

What the paper says

In an era marked by increasing regulatory scrutiny and market volatility, insurers’ decisions regarding capital acquisition and reinsurance utilization are paramount to their ability to thrive, adapt, safeguard policyholders’ interests and maintain a margin of profit. This study examines the relationship between reinsurance utilization and equity financing in the Nigerian insurance industry as part of the Nigerian financial system. It hypothesizes that there is no significant relationship between reinsurance ceded and equity in non-life insurance companies in Nigeria. The study hinges on the bankruptcy cost theory and the renting capital hypothesis. The ex-post facto research design is adopted for the study and the population comprises all the registered insurance companies in Nigeria undertaking non-life insurance from which a sample of thirty-six (36) companies are selected using the purposive sampling technique. Data is drawn from the annual reports of the selected companies and Nigeria Insurers’ Digest over a period of 23 years and analyzed using the pooled ordinary least squares regression, fixed effect, random effect regression and generalized method of moments. The results reveal a significant relationship between equity and reinsurance ceded. It is concluded that reinsurance utilization impinges on equity financing in non-life insurance companies. It is recommended that low-capitalized insurers should cede more risks as a buffer to their capital, guard against bankruptcy, and enhance profitability and solvency.

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https://doi.org/https://doi.org/10.22190/fueo250109007u

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@article{mfon2025,
  title        = {{THE NIGERIAN FINANCIAL SYSTEM: THE NEXUS BETWEEN REINSURANCE CEDED AND EQUITY FINANCING IN THE NON-LIFE INSURANCE SECTOR}},
  author       = {Mfon Sampson Ukpong et al.},
  journal      = {Facta Universitatas: Economics and Organization},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.22190/fueo250109007u},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.