Human Capital Expenditures and Financial Performance of Insurance Firms in Nigeria

Human capital development is a critical success factor required for any insurance business to compete globally. Insurance firms in Nigeria have invested heavily in human capital development. However, the financial performance of insurance firms in Nigeria does not reflect the huge investments in the development of human capital. Therefore, this study was conducted to examine the effect of human capital expenditures on financial performance of insurance firms in Nigeria. The specific objectives of this study were to assess the effect of salaries of workers on the return on assets of insurance firms in Nigeria, to ascertain the effect of health and safety cost on the return on assets of insurance firms in Nigeria, to assess the effect of contributory pension cost on the return on assets of insurance firms in Nigeria, to determine the effect of employee benefits cost on the return on assets of insurance firms in Nigeria, and to investigate the effect of employee training cost on the return on assets of insurance firms in Nigeria. The study adopted an ex-post facto research design and utilized a panel data of one hundred and thirty (130) pooled observations gathered from thirteen (13) insurance firms in Nigeria over ten (10)-year period (2014-2023) and employed panel multiple regression technique to analyze the data via E-views 10.0 statistical package. The study findings revealed that salaries of workers have significant effect (Coeff. = -0.7960{0.0023}) on return on assets of insurance firms in Nigeria, Health and safety cost have no significant effect (Coeff. = -6.9981{0.4378}) on return on assets of insurance firms in Nigeria, Contributory pension cost has no significant effect (Coeff. = 1.9491{0.1411}) on return on assets of insurance firms in Nigeria while employee benefits have significant effect (Coeff. = -2.4106{0.0006}) on return on assets of insurance firms in Nigeria. It also revealed that employee training cost has significant effect (Coeff. = 11.66843{0.0099}) on return on assets of insurance firms in Nigeria. It was thus concluded that human capital expenditure has a significant influence on financial performance of insurance firms in Nigeria. The study recommended, amongst others, that insurance firms should prioritize investing in employee training and development programs.