Transaction risk demand rises
Insurance broker and risk management organisation Marsh has released figures showing that demand for transactional risk insurance surged among the global deal community during 2014, surpassing previous records. Research conducted by the company showed continued use of transactional risk insurance in mature markets such as the US and Nordic region. Furthermore, though, Marsh reported that awareness of the product in emerging markets is increasing, noting that in 2014 the first ever policies were placed in Malaysia, Mexico, the Philippines and Saudi Arabia.
Marsh has reported that the US and Canada saw ‘dramatic’ growth in transactional risk insurance policies sold in 2014, crediting greater acceptance and use by law firms and private equity companies. “In the US,” continued the report from the company, “the market is being driven by private equity sellers seeking a clean exit, along with buyers utilising transactional risk insurance to enhance their bid in auction scenarios. The limits placed in the US rose US$2.7 billion in 2014, up 103 per cent from 2013.” Growth was reported to be ‘steady’ in Europe, the Middle East and Africa, while in the Nordics, the line of insurance has seen an increase of 260 per cent in the number of deals completed compared to 2013.
Karen Beldy Torborg, global leader of Marsh’s private equity and mergers and acquisitions (M&A) services practice, commented on the figures: “2014 was a landmark year for the use of this insurance solution. Record demand in mature M&A markets, which is testament to the efficacy of transactional risk insurance, combined with increasing using in emerging markets, helped drive these historic results.”