Friday, July 22, 2016

Berkshire Hathaway, Allianz Are Now Insuring Representations and Warrenties in M&A Deals

From Reuters, July 19:

Berkshire unit to insure representations in corporate mergers
Berkshire Hathaway Inc (BRKa.N) plans to begin insuring representations and warranties in mergers and other corporate transactions in the United States and Canada, the latest expansion of a fast-growing unit that Chairman and Chief Executive Warren Buffett has been building since 2013.
The unit, Berkshire Hathaway Specialty Insurance, on Tuesday said it hired Robert Underhill as senior vice president and head of its transactional liability business.

Underhill was previously a partner at U.S. law firm Locke Lord focusing on insurance mergers and acquisitions, reinsurance and other insurance transactional and regulatory matters.

Representations and warranties insurance can protect buyers and sellers from losses resulting from inaccuracies in documentation for their transactions, and can increase the prospect the transactions will eventually close. The Berkshire unit plans to offer primary and excess coverage....MORE

And July 20 at Bloomberg, here comes the competition: 

Allianz to Guard Dealmakers Against M&A Surprises in U.S. Push

Allianz SE, Europe’s largest insurer, is expanding in North America to guard commercial clients against risks in dealmaking.

The insurer will offer coverage to protect buyers from losses tied to inaccuracies during negotiations with companies that they eventually acquire, Munich-based Allianz said Wednesday in a statement. The firm is partnering with Euclid Transactional LLC, which underwrites liability insurance, for the effort in the U.S. and Canada and plans to bring the offering to Asia and Europe “in the near future.”

Allianz has been focusing on business coverage in the U.S. after striking a deal in 2014 to sell Fireman’s Fund, the insurer of luxury homes and yachts, to Evan Greenberg’s Ace Ltd. The German company opened a financial lines division in North America last year, hiring Paul Schiavone from Zurich Insurance Group AG to lead the business. The company said the timing is right for the push into so-called transactional-liability coverage, given the pace of mergers and acquisitions.

“Buyers and sellers are not always forthcoming about business operations and inherent risks”...MORE
Both stories thanks to a reader.