An Investigation into the Diversification-Performance Relationship in the U.S. Property-Liability Insurance Industry

25 Pages Posted: 5 Aug 2008

See all articles by Dr. B. Elango

Dr. B. Elango

Illinois State University - College of Business

Yu-Luen Ma

Illinois State University - Katie Insurance School

Nat Pope

Bradley University - Department of Finance

Abstract

This article investigates the relationship between product diversification and firm performance in the U.S. propertyliability insurance industry using data over the 1994 through 2002 time period. Using various measures of product diversification and firm performance, we find that the extent of product diversification shares a complex and nonlinear relationship with firm performance. Our findings suggest that performance benefits associated with product diversification are contingent upon an insurer's degree of geographic diversification. Robustness tests using subsamples and market returns for public firms show consistent results.

Suggested Citation

Elango, Dr. B. and Ma, Yu-Luen and Pope, Nat, An Investigation into the Diversification-Performance Relationship in the U.S. Property-Liability Insurance Industry. Journal of Risk & Insurance, Vol. 75, Issue 3, pp. 567-591, September 2008, Available at SSRN: https://ssrn.com/abstract=1202443 or http://dx.doi.org/10.1111/j.1539-6975.2008.00275.x

Dr. B. Elango (Contact Author)

Illinois State University - College of Business ( email )

Normal, IL 61761
United States

Yu-Luen Ma

Illinois State University - Katie Insurance School ( email )

Normal, IL 61790
United States

Nat Pope

Bradley University - Department of Finance ( email )

1501 West Bradley Avenue
Peoria, IL 61625
United States

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