An Empirical Evaluation of Equity Portfolios Held by Insurance Companies in Kenya

Abstract

The study set out to evaluate quoted equity portfolios held by Kenyan insurance companies and the extent of their diversifiCation . The relationship between different equity portfolios of respective insurance companies and the SE 20 share index was to be determined . In order to achieve these objectives , primary and secondary data was used to generate portfolio returns . Regression analysis was used to derive the beta . Four models: Sharpe , Treynor, Jensen and Coefficient of variation were utilized to determine relative performance and the extent of diversification . The result of this study indicates that quoted equity portfolios held by insurance companies are poorly diversified . Thus, this study recommends that insurance companies need to reconsider aspects of portfolio management for example the timing of acquisition and disposal. The performance of portfolios needs to be evaluated within given time frames and appropriate action taken ; moreover , investment managers should be appraised on the basis of optimal decision - making .