By By: Bashiru Musa Sa‘id
Abubakar Salihu Usman
Abstract
This research investigated the relationship between liquidity Risk administration and financial performance of listed insurance companies on the Nigerian Exchange Group (NGX) from 2020 to 2024. A correlational research design was employed, analyzing secondary data from 5 insurance firms over a 5-year period. Multiple regression analysis was used to examine the data. The findings indicated that current ratio had a significant negative impact on financial performance, whereas quick ratio had a significant positive effect. Conversely, cash ratio had a negative but insignificant impact on financial performance. The study recommends that insurance companies’ management invest idle cash in short-term portfolios to generate higher returns, thereby enhancing company performance. Furthermore, insurance regulators in Nigeria should establish policies to penalize companies that fail to maintain adequate liquidity ratios and meet claims obligations. Given the high-risk nature of insurance services, it is essential for companies to prioritize investments in liquid assets, despite associated costs, to ensure timely commitment fulfillment.
