Use of transactional risk insurance reaches record levels

Use of transactional risk insurance significantly increased in 2018, with policy limits in excess of US$1 billion now available for single transactions, as private equity firms and strategic investors increasingly use insurance to reduce the risks associated with mergers and acquisitions.

In its latest Transactional Risk Insurance Report, Marsh reports that it placed transactional risk insurance on behalf of clients on 1,089 transactions in 2018, up 31% on 2017. Aggregate limits placed also increased, rising 35% in 2018 to US$36.5 billion, driven by the size and number of transactions across large and mid-market deals in which insurance is used.

“Transactional risk insurance is now firmly established in the M&A marketplace as an important tool that can help mitigate deal risk, evidenced by its widespread adoption among private equity firms and strategic investors globally,” said Karen Beldy Torborg, Global Leader, Private Equity and M&A Services Practice, Marsh JLT Specialty. “Demand for these solutions is on course to remain high throughout the rest of 2019 and we expect the insurance market, now supporting very large limits, to be ready to respond.”

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