Aggregate Risks and Financial Performance: Risk Management Mediator

Abstract

This study aimed to reveal the impact of financial risk management on the performance of Jordanian insurance companies. The study sample consisted of (21) Jordanian insurance companies, all of whom were selected from the Amman Stock Exchange for the period (2009-2018). The study followed descriptive and analytical approach. Multiple regression analysis was also applied to measure the impact of various investments (financial investments, other investments and reinsurance) on the financial performance as measured by the return on equity. - ROE, in addition to measuring the standard deviation of returns for each type of investment to identify the role of macro risk on insurance companies` financial performance. Empirically the results showed that there a statistically significant impact of financial investments, other investments and reinsurance on the financial performance of insurance companies, where other investments reflected the highest degree of significant impact (3.707), and the least in terms of the degree of significant influence was for financial investments (B = 0.205). The results also showed that the returns of financial investments are characterized by a very high degree of variance in term of returns.  The study recommended the need to increase and diversify their investments especially in real estate and certificate of deposit diversifying also, to plan effectively to face high-level risks according to a specific and effective strategy approved by specialized experts in the field of risk management.