The REAL ESTATE INVESTMENT AND FINANCIAL PERFORMANCE OF INSURANCE COMPANIES IN KENYA

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Published Jun 30, 2026

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TERER D.
Master of Science in Finance, Jomo Kenyatta University of Agriculture and Technology, Kenya
ROCHE C., PhD
Lectures, School of Business and Entrepreneurship, Jomo Kenyatta University of Agriculture and Technology, Kenya

Abstract

Purpose: Insurance firms play a critical role as institutional investors, allocating substantial resources as well as mobilizing contractual savings while simultaneously meeting long-term policyholder obligations under a regulated environment. Despite the growing adoption of investment diversification, empirical evidence on whether real estate investment enhances insurers’ financial performance in Kenya remains mixed and inconclusive. The study examined the effect of real estate investment on the financial performance of insurance companies in Kenya.


Methodology: The study adopted a descriptive research design and targeted all 55 insurance companies licensed and operating in Kenya, applying a census approach due to the manageable population size. Secondary panel data covering seven years (2019 – 2025) was obtained from IRA reports, audited financial statements, and relevant regulatory publications. Financial performance was measured using ROI. Data analysis was conducted using panel regression techniques, with random effects models estimated.


Findings: The findings revealed that the model had strong explanatory power with an R-squared of 0.6423, indicating that approximately 64.23% of the variation in financial performance is explained by real estate investment. The regression results showed real estate investments (β = 0.2684, p < 0.05) had positive and statistically significant effects on financial performance. The study concludes real estate investment significantly enhances the financial performance of insurance firms in Kenya; however, the average ROI remains below the recommended industry benchmark, indicating sub-optimal portfolio efficiency.


Reocommendations: Based on these findings, the study recommends that insurance firms should adopt optimal asset allocation strategies, increase exposure to high-performing asset classes such as real estate and strengthen portfolio management practices through continuous performance monitoring and rebalancing. Policymakers are also encouraged to review investment guidelines to provide greater flexibility for insurers while ensuring prudent risk management.

Article Details

Issue
Vol 7 No 1 (2026)
Section
Articles
Author Biographies

TERER D., Master of Science in Finance, Jomo Kenyatta University of Agriculture and Technology, Kenya

Master of Science in Finance, Jomo Kenyatta University of Agriculture and Technology, Kenya

ROCHE C., PhD, Lectures, School of Business and Entrepreneurship, Jomo Kenyatta University of Agriculture and Technology, Kenya

Lectures, School of Business and Entrepreneurship, Jomo Kenyatta University of Agriculture and Technology, Kenya

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