Effect of unclaimed assets on the performance of life assurance companies in Kenya
Kenya is also among the countries in the world that have enacted legislation to regulate the management of unclaimed assets from various companies. The Unclaimed Financial Assets Act of 2011 is the main regulation that outlines the way companies are supposed to handle unclaimed assets in their custody over a specified period of time. The Act provides for the legislative framework for dealing with unclaimed financial assets. The purpose of this study was to establish the effect of unclaimed assets on the profitability of life assurance companies in Kenya. The study adopted a survey research design that included all the life assurance companies in Kenya. The number of life assurance companies was 13 by June 2013. The researcher opted for a census this was a small number. The study made use of secondary data that was collected from published accounts of the life assurance companies in Kenya. The data was analyzed using simple linear regression with unclaimed assets as the independent variable and profitability as the dependent variable. The study revealed that unclaimed assets formed a significant percentage of the profits that were declared by life assurance companies in Kenya before the year 2011. However, after the enactment of the bill on unclaimed assets in 2011, all the life assurance companies were required to submit their unclaimed assets to the government and this significantly affected their total profits. Their profits seemed to significantly drop for the years 2011 and 2012 when the unclaimed assets were removed from the profit and loss accounts of the life assurance companies. The study concludes that unclaimed assets formed a significant portion of the profits of commercial banks.