Research Article Open Access

Predicting Insurance Investment: A Factor Analytic Approach

Samuel Obi-Nnamdi Agwuegbo, Adetunji Philip Adewole and A. N. Maduegbuna

Abstract

Problem statement: In the last decade growing attention has been paid to the pattern of investments by the insurance industry and the question of how to evaluate such investments. In an economy where the capital market is huge and active, mathematical considerations come into play in the selection of investments to ensure yield maximisation. Approach: This study examined the use of factor analysis as an emerging technique for the analysis of insurance investment in Nigeria. Results: The proposed technique described a number of methods designed to analyze interrelationships within the investment variables in terms of few underlying but unobservable random quantities called factors. The factors were constructed in a way that reduces the overall complexity of the data by taking advantage of inherent interdependencies. Conclusion: The result obtained through this approach were promising and shows that two principal components of the factor loadings have a cumulative proportion of variance accounted for 94.5% of the total variations of the investments pattern.

Journal of Mathematics and Statistics
Volume 6 No. 3, 2010, 321-324

DOI: https://doi.org/10.3844/jmssp.2010.321.324

Submitted On: 1 June 2010 Published On: 30 September 2010

How to Cite: Agwuegbo, S. O., Adewole, A. P. & Maduegbuna, A. N. (2010). Predicting Insurance Investment: A Factor Analytic Approach. Journal of Mathematics and Statistics, 6(3), 321-324. https://doi.org/10.3844/jmssp.2010.321.324

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Keywords

  • Analysis
  • forcasting
  • regression analysis
  • multivariate analysis
  • principal components
  • eigenvalues