CORPORATE DIVERSIFICATION AND PERFORMANCE OF LISTED INSURANCE FIRMS IN NIGERIA

Abstract

The study examined the effect of corporate diversification on the financial performance of listed insurance firms in Nigeria. Specifically, it investigated the effects of geographical diversification, business subsidiary diversification, and product diversification on return on assets. An ex-post facto research design was employed. The population consisted of fifteen listed insurance firms on the Nigerian Exchange Group, while nine firms were purposively selected based on data availability. Secondary data covering the period 2015–2024 were sourced from the annual reports of the selected firms. The hypotheses were tested using panel regression analysis with the Estimated Generalized Least Squares (EGLS) technique. The findings showed that geographical diversification has a positive and significant effect on return on assets (β = 0.027318, p = 0.0000); business subsidiary diversification has a positive and significant effect on return on assets (β = 0.028473, p = 0.0000); and product diversification has a positive and significant effect on return on assets (β = 0.002402, p = 0.0136).In conclusion, firms operating in the insurance industry are able to leverage the advantages of spreading their operations across different fronts, thereby reducing risk concentration and enhancing income stability. The study recommended that the management teams of listed insurance firms in Nigeria should strategically extend their operations into underserved and emerging regions across the country. By building a stronger presence in diverse geographical locations, firms can tap into new customer bases, reduce overdependence on highly competitive urban markets, and improve stability in revenue generation, thereby strengthening their overall financial performance.