THE NEXUS OF SOLVENCY MARGIN AND ASSET LIABILITY MANAGEMENT OF INSURANCE COMPANIES IN NIGERIA

Abstract

Asset-liability management plays a very critical role in determining the solvency of a financial institutions including insurance companies operating in Nigeria. This study attempts to investigate the role and relevance of asset-liability management as a critical determinant of the solvency position of an insurance firm, and the reasons why solvency margin, is a key regulatory tool in the insurance sector. Data was collected from secondary sources like the annual reports and financial statements of six insurance companies from 2015 to 2019 and the study found that there is a positive relationship between assets-liability management and the solvency of an insurance company in Nigeria. Finally, the study recommends that there should be periodic review of the assets and liabilities of insurance companies in the Nigerian market, and that the National Insurance Commission should ensure that it is only companies with good solvency margin operates in the country.