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This study identifies the determinants of profitability in the life insurance industry of Ghana. The study also examines the relationship among the three measures of insurers' profitability, which are investment income, underwriting profit and the overall (total) net profit. The financial statements of ten (10) life insurance companies covering a period of eleven years (2000 to 2010) were sampled and analyzed through panel regression. The findings indicate that whereas gross written premiums have a positive relationship with insurers' sales profitability, its relationship with investment income is a negative one. Also, the results showed that life insurers have been incurring large underwriting losses due to overtrading and price undercutting. The results further revealed a setting-off rather than a complementary relationship between underwriting profit and investment income towards the enhancement of the overall profitability of life insurers. The policy implications of this study for the stakeholders of the life insurance industry are enormous. For instance, insurers must have well resourced actuary departments to perform price validation of all policies in order to prevent overtrading and price undercutting by insurance marketing agents. In addition, the intention of the NIC to adopt a risk-based approach in its supervision is not only timely but a very significant move that will improve upon the accounting and records keeping standards of the industry as well as the governance and risk management structures of the sector. This study is the first of its kind about the life insurance market of Ghana. It therefore adds more to literature and opens the debate for more empirical studies in this area of life underwriters.

Purpose Rural and community banks (RCBs) provide financial services to small enterprises in rural and sub-urban areas. The purpose of this paper is to examine their financial performance through a case-specific evaluation of a small bank situated in the northern part of Ghana. Design/methodology/approach The authors employed a triangulation method comprising relative ratio analysis, bivariate and generalized method of moments (GMM) techniques for the evaluation of the audited annual financial statements of the bank covering a period of 15 years. Findings The relative ratio analysis show that the bank's financial performance has generally been above the average of the rural banking industry. The bivariate analysis indicates that although the loans portfolio is positive, it is not properly fitted. That is, some of its loan portfolio deviates from the path of expectation. The GMM analysis indicates that its financial performance is significantly influenced by liquidity management, bank capital and size which have enhanced its expansion and intermediation to rural households and microenterprises. However, an increase in the government treasury bill rate has a declining effect on the bank’s profitability. Practical implications The findings have significant policy implications for the management and supervision of RCBs. RCBs should deal with the spillover effects of the banking and MFIs’ crisis by educating and re-assuring their customers of their financial integrity. Most importantly, they differentiate their services from the other financial institutions within the space of the rural financial architecture. Originality/value Majority of research into this area has focused heavily on large commercial banks. This research adds value to the literature by re-focusing the searchlight on the financial performance of small banks.

Purpose -The purpose of this paper is to examine the risk management practices of life assurance firms and non-life insurance firms. Design/methodology/approach -Through a comparative case study methodology, the study assesses the state of risk management in both life assurance companies and non-life insurance firms to determine whether they exhibit different or similar risk management practices. The results of the survey were also analyzed and compared to the principles of good practices in financial risk management. Findings -The findings of the study revealed some differences and similarities in the risk management practices of life and non-life insurance firms. Almost all the life companies have stated their risk appetite levels, which enable them to identify which risks to absorb and which ones to transfer. But non-life insurance firms have not laid down their risk tolerance levels explicitly. The results further revealed that the industry lacks sufficient personnel with the requisite risk management skills and that the sector does not manage risks proactively, rather they do so in a reactive response to regulatory directives. Practical implications -Effective management of risks by insurers will increase the penetration of insurance in Ghana. Social implications -Risk management is a crucial issue, not only for the survival and profitability of the insurance industry, but also for the socio-economic growth and development of the whole economy. As major risks underwriters, insurance companies need to adopt good practices or quality measures in the management of financial risk. This is important, more so, as the industry prepares to re-position itself to underwrite the risks in the emerging oil and gas industry of Ghana. Originality/value -Research into financial risk management in the insurance industry from the Ghanaian perspective is rare. This study is therefore timely and its findings are invaluable for the efficient management of financial risk in the insurance industry.

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