This study investigated underwriting as a determinant of financial performance of an insurance company in Nigeria drawing evidence from Axa Mansard Insurance Plc. The specific objectives of the study were to examine Underwriting Expenses and Deferred Acquisition Cost as determinants of growth rate of profit-after-tax of AXA Mansard Insurance Plc. Ex-post facto research design was used in the study. Statistical analysis technique applied was Autoregressive Distributed Lag cointegration technique. It was found that underwriting expenses did significantly determine the growth rate of profit-after-tax of AXA Mansard Plc. This was at p-value of 0.0158 which was lower than the level of significance at 0.05. Also, it was revealed that Deferred Acquisition Cost did not significantly determine the growth rate of profit-after-tax of Axa Mansard Plc. This was at p-value of 0.0518 which was higher than the level of significance at 0.05. Based on the findings of the study it was concluded that financial performance of Axa Mansard Insurance Plc was not jointly determined by Underwriting Expenses and Deferred Acquisition Cost. In line with the findings of the study it was recommended that understanding the details behind their cost levels – on a per product, per channel, or per location view, for instance – will enable insurers to get to the root causes of business complexity and develop targeted countermeasures. In addition, a consistent standardization platform should be put in place. This can be achieved by stringently limiting the company’s product and process complexity and supporting same with a streamlined IT platform.
Keywords: Underwriting expenses; deferred acquisition cost; profit-after-tax; ARDL
