ACE Group has introduced three new transactional risk insurance products that offer protection to buyers and sellers participating in mergers and acquisitions (M&A) and other transactional deals throughout North America and in international markets. These products — representations and warranty insurance, tax indemnity insurance and contingent liability insurance — enable parties to efficiently transfer transactional risk, increase deal value and maximize returns, thus strategically enhancing a party’s position in competitive auctions and bridging gaps in deals that might not otherwise close.
The demand for transactional risk coverage has risen significantly in recent years, and has rapidly become a critical tool for both buyers and sellers. Deal participants’ appreciation and understanding of the risk transfer elements provided by these products, as well as their ability to use this coverage strategically to facilitate the negotiation and execution of transactions, is largely responsible for driving this growth.
ACE recently appointed Edward Markovich as vice president, Transactional Risk, to lead this new global ACE initiative. Based in New York, Markovich will report to Steven Goldman, senior vice president, Professional Risk, ACE USA, and will focus on underwriting transactional risk in North America. As ACE expands its transactional risk capabilities overseas, Markovich will coordinate with colleagues worldwide to set policy and execute ACE’s global strategy in the transactional space.
“We have seen a significant increase in placement requests for transactional risk products over the past couple of years. In some instances, these have doubled from one year to the next,” said Goldman. “Deal participants recognize that these coverages offer the high degree of sophistication that complex transactions require.”
ACE’s transactional risk product line is comprised of three key offerings:
- Representations & warranties insurance protects the insured for financial losses in the event of unknown breaches of a seller’s representations and warranties made in connection with an acquisition or merger.
- Tax indemnity insurance protects the insured against known contingent tax exposures resulting from the tax treatment of a past transaction, investment or other legitimate business activity.
- Contingent liability insurance protects the insured against known exposures that may arise after the close of a transaction, such as successor liability, open-ended indemnities and/or potential litigation.
Transactional risk products are offered within ACE’s Professional Risk group, through a specialized unit focused on financial institutions, including dealmakers such as strategic buyers and sellers, private equity sponsors and business owners and their respective advisors and managers.
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