HUB International is a leading North American insurance brokerage with offices throughout Canada and the United States. Our reputation in the industry is built on the unparalleled service, coverage and value we provide our clients. We understand our clients’ businesses and are market leaders in placement experience. With the expertise and depth to ensure that you have the right solution at every stage of your business, Our Knowledge becomes Your Advantage.
Mergers & Acquisitions Insurance Products
Mergers & Acquisitions insurance products are designed to cover the potential liabilities that arise out of transactions. These policies can be purchased by either the buyer or seller, depending on where the liability rests in the underlying transaction. There are instances when they can be used for general corporate purposes, particularly for tax and litigation-related issues.Primarily, they are used to help facilitate deals, remove obstacles to transactions being completed or to unlock funds otherwise reserved against potential liabilities. The following are the main insurance product categories but insurers will consider additional exposures outside of these.
Tax Opinion Insurance
These policies are used to ring-fence potential liabilities arising from specific tax treatments in the event they are challenged by the relevant tax authorities. Insurers will consider situations where legal or accounting opinion supports the treatments but where a buyer is concerned there is the possibility of a challenge by the tax authorities.Tax Opinion insurance premiums are in the region of 3% to 8% on the limit purchased. The pricing will be governed by the likelihood of challenge and how aggressive is the tax position undertaken.
Similar to tax opinion insurance, these products transfer liabilities arising from potential litigation. The insurance can ring-fence certain liabilities or sit excess of an estimated quantum to provide catastrophe cover where a negative outcome is expected. Similar policies are available for environmental contamination cost cap.These products are more difficult to rate as each scenario is very different. Pricing would ordinarily start at 5% of the limit purchased and can be considerably higher.
With an IPO, there are many risks that need to be addressed before, during and following the transaction that company directors, executives and officers should take into consideration. IPOs are unique corporate transactions with liability exposures that are long-tail in nature. While the IPO process may have been concluded in a 12-month period, an IPO related claim can occur several years after.
Why is IPO Insurance important?
When undertaking a public offering of securities and issuing a prospectus, the obligations and exposures faced by directors and officers increase and they can be personally liable. Potential areas for claims include:
- Failure to disclose material information, either in the prospectus or in any representations prior to the issuing of the prospectus
- Allegations of misstatements or misleading statements
Basic Directors & Officers Insurance policies can cover the IPO process but the breadth and suitability of cover is not as effective as Prospectus or IPO Insurance which specifically address the liabilities to which directors and officers are exposed.
Our core team is committed to generating value-added services to clients based on our operating principles:
- Competitive placement leveraging on our market clout and global reach
- Procuring only from “A” rated carriers with proven underwriting and claims performance
- Providing advice on specialty products – niche, experienced and team-based
- Fair, complete and value-added services provided with compensation transparency
- Skilled at assisting clients in making informed, knowledge-based decisions
Adhering to client expectations and renewal timelines; creating customized solutions within tight timeframes, and providing service responsiveness