AIG has the knowledge and experience to create bespoke M&A insurance solutions. Watch our 2 minute video for an overview.
We’ve assisted over 2,000 M&A deals and built up a vast understanding of insuring M&A transactions. Many of our specialist underwriters have had accomplished careers in the sector - from investment bankers to tax experts. This depth and breadth of experience is unique in the M&A insurance market.
We’ve seen more M&A claims than any other single insurer. We know from experience that when buyers and sellers face a significant loss, they want the reassurance of a specialist claims team that is experienced in and understands M&A claims.
Our unparalleled size and global structure allows AIG to be agile, responding to clients’ needs, and accommodating their deal timelines by drawing on our internal capabilities and expertise. Through our flexibility and agility, we are the complex deal carrier of choice.
When time is of the essence, rapid recognition of local issues and their potential impacts is essential. Our global network of local underwriters who understand local M&A market practice has a proven successful track record of delivering efficient and effective M&A insurance solutions.
We have the capacity to write W&I insurance, Tax and Contingent Liability policies with high limits all underwritten 100% by AIG. As a single carrier with significant capacity and multiple product lines, there is no need to juggle multiple insurers to manage commercial and M&A risk exposures.
M&A insurance is an important, but not the only part of AIG’s business. When you work with AIG you get the added experience, insight and capabilities of one of the world’s largest commercial insurers for coordinated coverage solutions across business lines.
AIG’s highly specialised M&A insurance products are underwritten by an international team of skilled insurance and M&A professionals who integrate closely with negotiating parties and their advisers to create tailored solutions that can facilitate commercial objectives whilst minimising deal risk.
Some examples include:
Warranty & Indemnity (W&I) insurance is a tailored product from AIG Europe’s M&A team which covers either the buyer or the seller for loss arising from breach of the warranties and indemnities given in an acquisition agreement (SPA).
Sellers can obtain a clean exit by using W&I insurance to ensure that the sale proceeds can be returned to investors and avoid the need of an escrow account.
Buyers can procure warranty protection on transactions where the seller is reluctant to give warranties or where there is doubt over the seller’s ability to satisfy a claim.
Any company considering a merger or acquisition.
The W&I policy, whether seller-side or buyer-side, will indemnify the insured party for loss resulting from a breach of a seller warranty in an SPA or breach of the seller’s obligations in a tax deed of covenant.
W&I Insurance enables a buyer to:
W&I Insurance enables a seller to:
Tax Liability Insurance from AIG can reduce or eliminate a loss arising from the successful challenge by a tax authority of a taxpayer’s position. Potential tax risks are typically identified during due diligence pursuant to a potential acquisition of a company and may have lied dormant within a target for many years.
A buyer may have to proceed with a transaction or investment where there is uncertainty in the application of tax law or inadequate time to obtain an advance tax ruling. The risk for the buyer is that the tax position of the target could be challenged by a tax authority, which could lead to a material reassessment of their liability to tax and could include interest, fines and penalties. Similar issues could arise where a group is rationalising its or its targets corporate structure either pre or post an M&A transaction.
Any company considering a merger, acquisition or restructuring with an identified tax issue.
Bespoke Tax Liability Insurance can also address:
Litigation Buyout Insurance (LBI) is a tailored insurance product from AIG Europe’s M&A team that quarantines a client from the uncertainties inherent in outstanding litigation whether those uncertainties relate to the outcome or to the eventual amount of damages awarded. LBI will either cap an insured’s financial exposure or remove it altogether and will be designed to meet the particular needs of the insured and the specific characteristics of the dispute.
LBI enables clients to ring-fence liabilities which may arise from any current or anticipated litigation, arbitration or other dispute. This may be particular useful in an M&A context where an unresolved dispute would otherwise prevent an acquisition proceeding or would have a significant impact on the purchase price. An LBI policy can transform the inherently uncertain liability of litigation into a quantifiable insurance cost which can enable the parties to the transaction to focus on the business being acquired.
Underwriting and cover are tailored to each case, allowing the policy to be adapted to a dispute, regardless of its subject matter. As such, LBI can be adapted to cover proceedings ranging from a simple breach of a supply contract, a more complicated employment issue through to highly complex securities litigation and intellectual property disputes.
Any company considering a merger or acquisition or companies with large, identified contingent liabilities.
Mergers and acquisitions (M&A) are both aspects of corporate strategy dealing with the buying, selling and combining of separate companies with the intention of generating growth within an existing market or expansion into a new market without having to create and develop a new entity from the ground up or enter into a joint venture.
The reasons behind M&A activity vary widely. Common rationales include: seeking economies of scale and distribution; enhancing value through combining businesses; increasing market share through the acquisition of competitors; and rationalising corporate and tax structures.
An M&A deal is considered successful when both parties emerge from the negotiations having created value of their shareholders, whilst being aware of the potential risks and realisable benefits. In order to achieve such a result, the parties will have to identify which aspects of the business are important to them from an operational and valuation perspective. Once identified, these will form the backbone of the agreement between the parties.
M&A insurance is a highly specialised field of cover that facilitates the smooth running of the M&A process. It does so by transferring certain potential risks of the transaction (whether already foreseen or which may surface at a later date) to an insurance policy. M&A insurance can also enable sellers to realise the benefits of the transaction sooner by avoiding the need for a retention or escrow account. This is particularly useful for managed funds who need to return funds to their investors, but has the potential for a significant time-value gain for any seller.