Mergers & Acquisitions
M&A insurance provides a bespoke insurance based solution to facilitate and support the successful completion of M&A transactions. Our M&A insurance policies are each tailored for the specific transaction at hand and so provide cover that is customised for the individual circumstances of the insured party. Through partnering with BCC, buyers and sellers involved in an M&A transaction can effectively transfer transaction risk to the insurer, allowing them to remove transaction road-blocks and focus on the realisation of their transaction.
The transaction risks that BCC specialises in are those risks relating to the potential breach of the representations, warranties and indemnities given in the course of an M&A transaction.
An M&A insurance policy provides insurance cover for financial losses arising from inaccuracies in warranties & indemnities. Where the buyer is the insured party this cover enables the buyer to claim against the insurance policy without the requirement to pursue recovery from the seller. Where the seller is the insured party the insurance policy will reimburse the seller for financial loss suffered due to warranty & indemnity claims made against it.
Each policy is crafted to jig-saw with the unique requirements of the transaction at hand. We will work with the insured to provide a highly customised policy, tailored for the insured’s needs, that fits with the risk and recourse profile of the transaction (such as mirroring liability expiry periods and retention thresholds that are included in the transaction sale agreement).
Our underwriters know M&A. As former top-tier advisory professionals they have a comprehensive understanding of the dynamics of an M&A transaction and how risk is allocated through legal documentation. We apply the same high service standards to our underwriting that are expected of all transaction advisory team members. We deliver our insurance solutions through a cooperative, flexible and technical approach in a timely manner to ensure execution certainty.
M&A insurance (which is also known as representations & warranties insurance or warranty & indemnity insurance) is an insurance product that seeks to transfer the risk of a liability arising due to inaccuracies in the warranties & indemnities given in the course of an M&A transaction from the transaction parties to the insurer.
The insured party may be the buyer or the seller.
By working with, and as part of the transaction team, BCC can provide highly customised and timely insurance solutions that can reduce or extinguish transaction risk, enabling otherwise challenging M&A transactions to become a reality.
An M&A insurance policy ensures that transaction funds received by a seller do not need to be retained or ring-fenced to meet potential future liabilities arising from the transaction as this liability is transferred to the insurer. This risk transfer, that allows a seller to move forward without the threat of future recourse to it, is known as a ‘clean exit’
Transaction parties may have differing expectations of the contractual liability structure contained in a sale agreement (such as where transaction parties are accustomed to the market regimes of different jurisdictions). Where this is the case, an M&A insurance policy can bridge the gap between the expectations of each party and provide a mutually accretive solution.
Certainty of Security
Where a buyer uses an M&A insurance policy, it is able to transfer the risk of a claim under the warranties & indemnities to the insurer. In so doing, it will have certainty that the insurer will stand behind the policy and be available to settle any claims. This removes any innate seller credit risk and the need to retain funds for future claims in an escrow account
Continuing Commercial Relationships
There may be circumstances where the transaction parties have ongoing commercial relationships (such as where the seller or its management team are involved in the target business after the completion of the transaction). An M&A insurance policy enables a claim to be made against the insurer rather than pursing the seller for an inadvertent breach and hence avoid possibly damaging any ongoing commercial relationship
By stapling an M&A insurance policy to the sale agreement in any competitive auction process a seller may expedite the process and ensure it achieves a ‘clean exit’ (such as where it mandates that buyers must use an M&A insurance policy with any bid) and a buyer may improve the attractiveness of its bid to a seller (such as where M&A insurance is not compulsory within the auction)
An M&A insurance policy can form part of an asset protection strategy for an individual seller seeking to safe-guard family assets and plan for the future with certainty, by avoiding the risk of litigation and claims being brought in relation to an M&A sale.
Passive Seller Protection
Some sellers are not actively involved in the conduct of a target business and yet are required to provide a full suite of warranties & indemnities. Such passive sellers are able to protect themselves from future transaction liabilities that arise due to breaches of warranties & indemnities by transferring this risk to an insurer through the use of an M&A insurance policy.
MARTIN LARKMAN, HEAD OF MERGERS & ACQUISITIONS
Martin has a wealth of M&A sector experience that encompasses both the legal and insurance aspects of the sector. Martin gained substantial legal advisory experience through his work as a member of the Sydney based Private Equity team of Allen & Overy. Martin is an England & Wales Law qualified solicitor and in addition to working in Sydney he has also practiced in London. Martin specialises in corporate law and focused his legal practice on M&A transactional work. This invaluable legal experience provides Martin with an insider’s perspective and understanding of transaction risk and how this risk is allocated through legal documentation.
Prior to holding his current position, Martin held the role of Australasian Manager of the M&A team of AIG, underwriting M&A transactions across APAC. As part of this role, Martin has led multiple large multijurisdictional programs of M&A with a number of global excess markets following form. No policy underwritten by Martin has to date been the subject of a paid claim.
In his current role as Head of M&A at the Bond and Credit Company, Martin is building and leading an M&A Insurance team focused on becoming the leading product provider in the region.
TOBY GUY, EXECUTIVE DIRECTOR
Toby has two decades of experience in the insurance industry covering the full spectrum of insurance and reinsurance company operations. Toby commenced his career at Munich Re taking on several leadership roles, involving a number of business areas that required a strong understanding of domestic and international insurance solutions, including business development, underwriting, financial and operational management. Before leaving Munich Re he was, Corporate Manager of Great Lakes Australia a specialist insurer within the Munich Re (Group).
In 2012, Toby moved to Austagencies, one of Australia’s leading underwriting agencies, as General Manager where he lead the development of innovative new products and focused on delivering operational efficiencies, increased profitability, and organisational growth year on year.
In his current role as Executive Director at the Bond and Credit Company, Toby is building and leading a new style of underwriting agency in Australia which focuses on bancassurance business with a solutions focus for selected clients in the Australian market.