In step with the record M&A activity set in 2015, Allianz Group’s specialist corporate insurer Allianz Global Corporate & Specialty® (AGCS), announced today that it is launching a Transactional Liability unit in North America to help clients face inherent risks posed by M&A transactions. This new practice will offer financial protection specifically to protect against inaccuracies made about target companies or businesses in connection with mergers, acquisitions and divestitures. This will be the first phase of a wider regional rollout for AGCS, to include Asia and Europe in the near future.
AGCS, in partnership with several other carriers, is aligning with Euclid Transactional, LLC as its Managing General Agent (MGA). Specializing in the underwriting of representations & warranties, tax liability, contingent liability and other transaction insurance coverages, Euclid employs top experts in M&A deals.
“Given the continuously active and strong M&A landscape, we are excited to build a long-term partnership with some of the most respected underwriters in the industry and look forward to expanding our transactional and private equity related offerings,” stated Paul Schiavone, regional head of Financial Lines, North America. “As a carrier partner with Euclid, we will be able to provide the specialized services needed to meet today’s competitive climate.”
According to Bloomberg, investors spent a record $3.8 trillion on mergers and acquisitions in 2015, and despite current market volatility, M&A activity is expected to remain strong in 2016. According to KPMG's 2016 M&A Outlook Survey, 79% of M&A executives prefer to close deals in the U.S., influenced by a relatively healthy economy and receptive credit markets.
As buyers and sellers are not always forthcoming about business operations and inherent risks, however, post-sale disputes are common and financial issues surface. To help alleviate such matters and facilitate the process for a merger, acquisition, divestiture, or other business transaction, parties are increasingly purchasing transactional liability insurance.
“The appetite for transactional liability has increased tremendously over the past couple of years with a global market penetration of 20%," stated Bernard Poncin, global head of Financial Lines, AGCS. “This business introduction is timely and a perfect fit for us, particularly in the U.S.”
From 2011- 2015, reports show that use of transactional liability insurance has grown 240 percent globally, with North America accounting for most of the growth in 2015 (40%). The U.S. is expected to provide the majority of growth in the near future.
Launched in early 2015, the AGCS North American Financial Lines team consists of seasoned professionals supported by AGCS Europe and the global network of Allianz Group, a leading provider of financial service products that serves clients in more than 160 countries. AGCS estimates the Financial Lines market to be at about $15 billion, with the U.S. accounting for 60 percent of global premiums.
AGCS’s comprehensive suite of Financial Lines coverage includes: Financial Institutions Coverage, Commercial Management Liability and Professional Indemnity Liability (Errors & Omissions).
“This new partnership represents an exciting step in Euclid’s overall plan for growth and expansion,” added Jay Rittberg, managing principal of Euclid Transactional. “We are so pleased to have Allianz join us as one of our first carrier partners, offering the financial strength and capacity required to execute and succeed in the ever-changing world of M&A.”
