Demand for Transactional Risk Insurance Hits Record Highs in 2015

Demand for transactional risk insurance continued to increase during 2015 across all regions as investors looked to reduce deal risk.

Strategic investors and private equity firms turned to transactional risk insurance to close deals in record numbers during 2015. Globally, Marsh’s mergers and acquisition (M&A) professionals placed 450 transactional risk policies during the year, a 32% increase from 2014. Limits placed increased year-over-year by 45% to US$11.2 billion, driven principally by larger deal sizes as well as more insurance limits being purchased per transaction.

Originally used almost exclusively by private equity firms, we have seen a dramatic uplift of corporate buyers using transactional risk insurance to better compete for assets, especially in auction situations. The split between private equity and corporate buyers continues to even out, moving from 61%/39% in 2014 to 56%/44% in 2015, which is a trend we expect to continue.

The Transactional Risk Report 2015 provides details on demand for transactional risk insurance on a regional basis. Key findings include:

• The Asia-Pacific region in particular accounted for the largest year-over-year increase.
• A dramatic uplift of corporate buyers using transactional risk insurance to better compete for assets.
• Greater awareness of and interest in the coverage from Latin America, driven by cross-borders deals into Latin America from the US and UK.