Tag archives: insurance

Key findings: 2018 SRS Acquiom Buy-Side Representations and Warranties Insurance (RWI) Deal Terms Study

SRS Acquiom recently published its first Buy-Side Representations and Warranties Insurance (RWI) Deal Terms Study. The study analyzed the terms of 588 private-target acquisitions that closed between 2015 and 2017, the majority of which are not required to be publicly disclosed. As Canadian M&A deals continue to use RWI at an increasing pace, insights from firms such as SRS Acquiom offer valuable perspective on popular terms in RWI covered deals. Some of the study’s key findings are outlined below.

Financial terms

  • Escrow. One of the most pronounced effects of RWI coverage is the reduction in the amount of
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Quebec opens its door to InsurTech: opportunities to grasp

The insurance industry is changing. A more digitally savvy customer base and the emergence of new technologies are reshaping the sector. Enter technology-led companies known as “InsurTechs.”

In Québec, this innovative business approach along with a substantial legislative change is expected to increase M&A transactions.

Mindful of offering a regulatory environment that is flexible and apt to respect the evolution of technologies and consumers’ needs, the province adopted Bill 141, An Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions, on June 13, 2018. This … Continue Reading

Increased M&A activity predicted as insurance industry evolves

The insurance industry is an evolving landscape. The emergence of new technologies and increased competition has created pressure to innovate while casting doubt on the viability of focusing on strategies emphasizing organic growth. These factors may drive an increase in M&A activity in the insurance industry, according to a report from KPMG International.

The report, which is based on interviews with insurance executives from around the world, concludes that the majority of insurance companies are seeking M&A opportunities in an effort to deploy their capital in pursuit of transformative growth. However, these companies will likely require significant support from M&A … Continue Reading

Reviewing the ABA 2017 Private Target M&A Deal Points Study: new RWI takeaways

For the first time, the American Bar Association’s Private Target Mergers and Acquisitions Deal Points Study (the Study) includes data points on the use of representation and warranties insurance in transactions. The Study analyses publicly available purchase agreements for transactions for which purchase agreements were executed and/or completed in 2016 and the first half of 2017 that involved private targets being acquired by public companies in the US (the Agreements).

Representations and warranties insurance (RWI) is a tool increasingly used by buyers and sellers in the context of mergers and acquisitions. As previously discussed on this … Continue Reading

Trends and opportunities in InsureTech M&A

Insurance companies have increasingly looked at technological innovation as both an opportunity to increase profit margins, and as a potential disruptive force in the industry, with some insurance executives estimating that one third of their operations may be lost to FinTech. On-demand insurance that allows a consumer to purchase insurance on an as-needed basis has started to enter the marketplace. Despite market disruptions, there are a lot of opportunities for traditional insurance providers to take advantage of technological advancements

In today’s data driven world, insurance companies can use data analysis to improve operational efficiency. There is also an opportunity for … Continue Reading

AIG reports increased R&W insurance claims in the M&A market

AIG, in its recently published 2017 M&A Claims Report, explored the rising number of representations and warranties (R&W) claims in the M&A market by examining AIG policies written between 2011 and 2015.

Increase in R&W claims

Mary Duffy, AIG’s global head of M&A insurance, posits that the marked increase in claims could stem from buyers becoming more knowledgeable of R&W insurance policies. Darren Savage, AIG’s Asia-Pacific M&A manager, agrees that buyer familiarity, fostered by repeat business, has created sophisticated consumers who are thinking more critically.

Duffy also notes that larger deals are those facing the greatest claims … Continue Reading

A rundown of “run-off insurance”

Run-off insurance is a particular aspect of director and officer liability (D&O) insurance that can protect directors and officers of a target company following an M&A transaction.  In many cases, a target company’s directors and officers will resign from their roles following an acquisition. Run-off insurance (also known as closeout insurance or run-off cover) protects directors and officers from claims made against them after they have stepped down.

D&O insurance will protect acting directors and officers, but it does not necessarily cover former directors and officers.  Former directors and officers could be unprotected if they don’t have some … Continue Reading

Predicting the future: will the boom in insurance M&A continue?

In a 2015 article, we reported that global M&A in the insurance sector was on the rise again after a number of quiet years in the aftermath of the financial crisis. Deal activity in the European market was hit particularly hard by the financial crisis, but a steady stream of transactions in the United States helped the Americas’ deal activity remain stable and eventually showed signs of recovery in 2013.

Earlier this year, we followed up to discuss a report which stated that 2015 had been a record year for North American insurance agency M&A. The question we … Continue Reading

Cyber security: what the hack?

In a previous blog post, we discussed how to manage cyber security risks during the negotiation and due diligence stages of an M&A transaction. In this post we discuss cyber security insurance as a tool for managing this unwelcome risk.

The cyber security risk

Although businesses have been ramping up their information security systems, the pace of cyber security breaches is not slowing down. One study estimates that cybercrime will cost businesses $2.1 trillion globally by 2019. And, as recent security breaches have taught us, a security breach can have reputational, moral, and deeply political complications. The 2014 hack … Continue Reading

Foreign investors eye Canadian companies

Canadian companies are becoming increasingly attractive to American and European companies as targets of foreign investment according to a recent article from the Lexpert Special Edition on Canada’s Leading Corporate Lawyers, published within the June edition of The Globe and Mail’s Report on Business Magazine. The Lexpert article states that both U.S. and U.K.-based investors in particular are increasingly turning their attention to Canada for M&A opportunities.

According to the Lexpert article, which surveyed leading Canada’s leading M&A corporate lawyers on the topic, American companies are the main source of cross-border deal activity, due in large part to … Continue Reading

Upward momentum in insurance industry M&A

A new study by Swiss Re Sigma entitled M&A in insurance: start of a new wave? (the Study) notes that M&A activity in the insurance sector is finally beginning to rise after a sharp decline in 2008 and 2009 resulting from the financial crisis. The Study is careful to note, however, that despite the recent spike, M&A insurance activity is still well below reported pre-crisis levels, with only 489 completed deals globally in 2014 as compared to 646 deals in 2007.

The role of structural and cyclical factors in insurance M&A

According to the Study, M&A activity in insurance … Continue Reading

Webinar – M&A in 2015: Reps and warranties insurance

Buyers and sellers are using M&A representations and warranties insurance more often in transactions as a tool to enhance bids in competitive auction processes and to minimize exposure to post-closing indemnification obligations. This type of insurance is beneficial to both buyers and sellers in M&A transactions by providing access to the insurance industry’s capital and allowing the transfer of certain transaction-related risks in M&A deals to the insurance markets.

On on Thursday, March 26, 2015, Glen J. Hettinger – Partner, Norton Rose Fulbright US LLP, Scarlet McNellie – Partner, Norton Rose Fulbright US LLP, and Jay Rittberg – Americas Head … Continue Reading

Make it someone else’s problem: allocating risk in M&A transactions through insurance

During the course of an M&A transaction, it is often the case that the most hotly negotiated aspects of a purchase agreement are the representations and warranties and related indemnities. This is not surprising as these are the key devices used to address allocation of risk as between the parties, and by extension, price. While buyers want the security and protection of knowing they paid for what they thought they were buying (essentially minimizing surprises post-closing), sellers often desire a clean exit from the transaction. Parsing though these competing objectives can be time consuming, costly and may hinder a deal.… Continue Reading

Webinar – M&A in 2015: Reps and warranties insurance

Join us on Thursday, March 26, 2015 for a web seminar on representations and warranties insurance: what is it, why do you want it, and how do you negotiate it?

Register now

Buyers and sellers are using M&A representations and warranties insurance more often in transactions as a tool to enhance bids in competitive auction processes and to minimize exposure to post-closing indemnification obligations. This type of insurance is beneficial to both buyers and sellers in M&A transactions by providing access to the insurance industry’s capital and allowing the transfer of certain transaction-related risks in M&A deals to the insurance … Continue Reading

Representation and warranties insurance: 2015 outlook

The Financial Post recently published an article highlighting legal innovations from the US that may see an upsurge of use in the Canadian landscape in 2015, including representation and warranties insurance (R&W insurance).

South of the border, Law360 reported that the use of R&W insurance “exploded, with the market for the liability policy growing roughly fourfold [in 2014].” Although R&W insurance has existed since the 1990s, it was the first time that insurers “struggled to keep up with… record demand.”

R&W insurance provides protection to both buyers and sellers involved in mergers and acquisitions transactions (M&A transactionsContinue Reading

M&A in the insurance industry

Mergers and acquisitions in the insurance industry are a big deal. Insurance companies range from small, regional private companies to large, international publicly-traded corporations with market capitalizations in the billions of dollars. When two companies decide to merge, or one company purchases part of another company, transactions can reach multi-billion dollar levels.

In a fiercely competitive industry with mature and established businesses, such transactions can be quite attractive because of the growth they offer the acquirer (and the capital they offer the seller). However, the insurance industry is highly-regulated, subject to numerous legal statutes and centuries of case-law, and sometimes … Continue Reading