Portfolio holdings of insurance companies in Kenya
The important role played by insurance companies as financial intermediaries cannot be under-estimated in a growing economy. As institutional investors in the capital market, they collect and administer savings on behalf of a large body of individual policyholders. In doing so insurance companies cornebetween ultimate borrowers and ultimate lenders and thereby provide efficient allocation of available investible resources for development. The purpose of this thesis is to study the portfolio holdings of insurance companies, both life and non-life, in the Kenyan economy during the period 1950 to 1974. ') Thus we are concerned with: 1. The extent to which changes in the port-folio hOldings of insurance companies have reflected changing demands of the Kenyan economy. /2. llJhatinfluences investment policies of Insurance companies in Kenya .. 3. The role a£ insurance companies with regard to government finance, the development of the capital market, the public and private sectors. 4. lIJhetherinsurance companJes have a role to play in the developmental process. In the light of the above objectives, it was found that: --'--' 1. Insurance fund managers are conservative investors who adopt a prudent image and pursue cautious portfolio policies because of their traditional concern for solvency. 2. Despite the large growth in their accumulated funds, insurance companies have responded only indirectly to the Kenyan situation by investing primarily in short-term assets and in other financial institutions ·aridhave had no appreciable impact on developing the already under-developed capital market. 3. Of late however, certain developments do suggest that the situation could be changed to make insurance companies increase their role in •• the economy without necessarily resorting \ to direct control of their operations. With regard to methodology, the study relies heavily on fulalysis and interpretation of available published data on insurance business between 1950 and 1974 and supplemented by information collected through personal intervie,';swith manager's of insurance funds of a number of insurance companies.