THE IMPACT OF PRODUCT DIVERSIFICATION ON THE FINANCIAL PBRFORMANCE OF LISTED INSURANCE COMPANIES IN SRI LANKA

Abstract

The purpose of this study is to examine the impact of product diversification on the financial performance of listed insurance companies in Sri Lanka. The return on assets ratio (ROA) used as financial performance measures and measures the product diversification by using diversification life assurance product line and diversification general insurance product line. This study used panel data consisting of 8 insurance companies in Sri Lanka for the period of 2015-2019. This research is conducting based on secondary data. Data will be obtained from the financial reports and websites of sample insurance companies and information from annual reports of the listed insurance companies in Sri Lanka and also gathered from the website of CSE from2015 to 2019. STATA used to analyze data. The fixed effect model was chosen to examine the impact of product diversification on financial performance. The study concluded that diversification of product lines in insurance sector has significant positive effect on the financial results of the companies in the insurance sector listed companies in Sri Lanka. It is recommend for the insurance companies to pay more attention to financial performance in terms of product diversification and try to turn the effect into a favorable one