The Relationship Between Corporate Social Responsibility Practices And The Financial Performance Of Insurance Companies In Kenya

Abstract

The study intended to determine the effect of corporate social responsibility on financial performance of insurance companies in Kenya. Financial performance was measured using the return on assets, CSR cost was calculated as total of all the amounts spent on CSR activities while for other companies it was by computing the percentage of profit before tax that was set aside for CSR activities. The size of the firm which was one of the independent variables used as a control variable was computed as the natural logarithm of total assets of the firm while retention ratio which was the other control variable was the ratio of net written premium to gross written premium. Secondary data was obtained from annual reports of the companies, IRA annual report, brochures, websites and any other publications of the companies. The study targeted the 48 registered insurance companies but complete could be obtained for only 21 companies. The study was carried out for five years from 2009 to 2013 and used multiple regression and correlation analysis to analyze the data obtained and a linear regression equation was used to represent the research findings. From the research CSR involvement has a very minimal positive relationship with financial performance of insurance companies in Kenya.