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Product diversification as a performance boosting strategy? Drivers and impact of diversification strategies in the property-liability insurance industry

Patty Duijm () and Ilke Van Beveren ()

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: We investigate the relationship between product diversification and performance in the Dutch property-liability (P&L) insurance industry for the period 2007-2018. We employ a two-step approach: we first investigate the drivers of diversification and, as a second step, we investigate the impact of diversification on risk and return. Our results suggest that the impact of diversification can be beneficial, as it reduces an insurer's risk. Diversification is however also associated with lower returns, while it is not significantly related to risk-adjusted returns. Furthermore, the impact of diversification on performance is contingent upon an insurer's size and its extent of diversification.

Keywords: insurance companies; diversification; risk; performance (search for similar items in EconPapers)
JEL-codes: G22 G3 L25 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-eff, nep-ias and nep-ind
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