In the modern era, the insurance sector has experienced a crucial transformation in its environment due to improvements in the requirement of financial risk, operational risk, political, economic, natural, technical resources, and high-tech facilities, resulting in a significant impact on its performance.  The broad objective of this research paper is to examine the impact of unsystematic risk on the financial performance of quoted Nigerian insurance firms. An ex-post facto research design was adopted. As of December 31, 2022, the population consisted of all 26 insurance companies that were listed on the Nigerian Exchange Group. The complete group of 26 listed insurance companies was subjected to census sample techniques for the years 2012 through 2022. According to the model's conclusions, the study discovers, among other things, that: Capital adequacy risk has a statistically significant influence on the financial performance of insurance firms in Nigeria, indicating that financial performance will be impacted if capital adequacy risk is not resolved by insurance firms in Nigeria.  The study recommends among others that Reviewing the adequacy of capital adequacy risk across all the insurance firms’ branches to ensure good capital adequacy. Also, assessment and the continuous monitoring of counterparty and portfolio to know when capital is adequate to finance all the policies undertaken.