TITLE
"Characteristics of Property-Liability Insurance Acquisition Targets," Journal of Insurance Issues, Kathleen A. McCullough and Robert E. Hoyt, Spring 2005, Vol. 28, No. 1, pp. 61-87. Full-text articles soon will be available through ABI/INFORM and EBSCO; click here for article PDF. 

ABSTRACT
This study analyzes the impact of diversification and focus strategies on
firms targeted for acquisitions. Based on a sample of acquisitions of property-liability
insurers from 1993 to 1997, the study centers on two major questions: (1) whether the
diversification or focus decision of the acquirer has an impact on the motivations
underlying the selection of a target firm with specific operational and capitalization
traits, and (2) whether the target firms are systematically altered on the basis of the
diversification or focus aspect of the acquisition. The study finds support for the
hypothesis that acquirers select firms with the financial and operational characteristics
to meet the diversification or focus needs of the acquirer. The study does not find
support for the hypothesis that acquirers systematically alter the capitalization or
operational characteristics of a target firm on the basis of the diversification or focus
aspect of the acquisition. By controlling for potential self-selection bias and by implementing
a definition of diversification and focus that controls for relatedness of the
lines of business of the acquirers and targets, the paper is able to extend prior literature
in the area. Additionally, the ability to track the financial and operational changes of
the target firm following the acquisition allows for a more detailed test of the hypotheses
than is possible in multi-industry samples.

[Keywords: property-liability insurance, self-selection bias, acquisitions, targets, diversification, focus].