EFFECT OF MERGERS AND ACQUSITIONS ON FINANCIAL PERFORMANCE OF INSURANCE FIRMS IN KENYA

Faith Ndunge Kyalo, Dr. Joshua Matanda

Abstract


This study endeavored to explore how financial performance of insurers in Kenya is influenced by M&A. To attain this, the study proposed to determine how financial performance of insurers is influenced by asset growth in acquisitions and mergers, synergy in acquisitions and mergers. This study took the descriptive research design. The target population consisted of middle management staff from the 13 insurance firms that have undergone mergers and acquisition in Kenya over the last 5 years. The determined sample size was 61, which was reached through stratified random sampling in which the 13 insurance firms will form the strata. This study utilized a questionnaire to collect primary data. Whereas the closed ended questions generated quantitative data. Both inferential and descriptive statistics were used in data analysis. Findings reveal that asset growth (β = 2.065, p = .000<.05); and synergy (β = 2.027, p = .000<.05) significantly influence financial performance at 95% confidence level. It is thus concluded that that there exists a statistically significant relationship between asset growth, and synergy and financial performance of insurance firms in Kenya. The study recommends that insurance firms can enhance the financial performance of their entities through mergers and acquisitions. By identifying strategic targets, firms can benefit from synergies arising from economies of scale.

Key Words: Financial Performance, Insurers in Kenya, Asset Growth, Synergy, Acquisitions and Mergers


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