Effect of Macroeconomic Variables on Risk-Adjusted Investment Performance of Listed Insurance Companies in Nigeria

The Nigerian insurance industry plays a significant role in financial intermediation through the mobilization and investment of premiums collected from policyholders. However, the investment performance of insurance companies is affected by prevailing macroeconomic conditions. This study therefore, investigates the effect of inflation rate, exchange rate, interest rate, gross domestic product (GDP) growth rate, and money supply on risk-adjusted investment returns of listed insurance companies in Nigeria from 2010 to 2025. Secondary data was analyzed using panel data econometrics with fixed effects model. The data for dependent variable (risk-adjusted investment returns) was sourced from NGX Insurance Index while the data for independent variables (macroeconomic indicators) were source from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics. The Hausman specification test confirmed the appropriateness of the fixed effects model. Multiple regression analysis was employed to examine the effect of macroeconomic variables on investment performance. Results indicate that GDP growth rate and money supply exert a significant positive effect on investment performance of listed insurance companies, while inflation rate and exchange rate have a significant negative impact. Interest rate showed a statistically insignificant positive relationship. The findings suggest that macroeconomic stability is critical to enhancing the risk-adjusted investment performance of insurance companies in Nigeria. The study recommends prudent monetary policies, inflation control measures, and effective portfolio diversification strategies to enhance the sector's investment performance.