Ownership and financial performance in Sierra Leone’s insurance sector : a comparative study of national insurance company and reliance insurance trust corporation

Abstract

Most reports describe public enterprises in Sierra Leone as inefficient. This study evaluated the National Insurance Company (NIC), which is a state-owned entity, against Reliance Insurance Trust Corporation (RITCORP), which is a private insurer in Sierra Leone, through their financial statements and other company records spanning from 2020 to 2024. The study assessed their liquidity, profitability, solvency, financial risk, and shareholder return expectations through ratio analysis, Altman’s Z-Score, Gordon’s Growth Model, and Net Present Value (NPV) assessments. RITCORP demonstrated superior performance compared to NIC through its better profitability, consistent dividend payments, and stable financial condition, yet NIC struggled with liquidity problems, negative equity returns, and high bankruptcy risk. The study demonstrates that governance structure, together with operational autonomy, produces major effects on financial performance. The research demonstrates that ownership structure directly affects both financial strategy and performance results in the insurance industry. The study suggests that public insurers need better investment appraisal methods and stronger governance systems. The research faces two main limitations. The scope is limited to only two companies: one privately owned and the other government owned. This small sample may not reflect the state of most government and private entities, and hence any attempt to generalise the results should be done with caution. Future studies could increase the sample size while adding a macroeconomic dimension by including political stability and inflation.