A target company’s insurance portfolio is an important asset to review during a deal. Not properly vetting this portion of a company can leave the new owner open to serious financial risk. We understand how critical it is to review all a company’s insurance related activities. Our team examines the insurance terms, cost, claims history and all transaction-related documents to understand current insurance placement and any items the potential new owner needs to consider.  

Understanding the financial outlay of an insurance portfolio is an important part of the insurance due diligence process. We review current annual insurance costs and provide a comparison of post-close annual costs to the amount expensed under historical income statements. We also consider any current and historical self-insured expenses and examine one-time transactional expenses and surety obligations. Balance sheet reserves and outstanding collateral (e.g. letter of credit) are reviewed, and we estimate increase/decrease post-close over a five-year period.

As we would do for any new client at Alliant, we perform an extensive review of the company’s current insurance portfolio, providing a summary of current programs, including premium, limits, ratable exposure, retention, carrier and key terms/conditions. Based on this, we can provide suggestions to improve the program by reviewing contracts, benchmarking limits, financial ratings for insurance carriers and conducting a review of catastrophic loss exposures.

An outstanding or poorly handled claim can be a major liability, so parent companies need to understand the claims history of any potential portfolio companies. As part of our insurance due diligence, we summarize historical claims experience, analyze historical claims activity and provide commentary on how historical experience compares to industry peers. If needed, we can also conduct actuarial studies for applicable lines of coverage.

Throughout the closing process, we review and provide comments and suggestions on applicable transactional documents. We also address change of control provisions, provide documentation for access to pre-close insurance policies and suggest language for post-close access to seller’s insurance. We summarize one-time transactional insurance programs, including, but not limited to, representations & warranties, tax liabilities and environmental liability.

Once the deal is done, our team is ready to help with next steps. We outline any pending post-close incremental costs, then implement the new insurance program and suggest marketing timeline and strategy. In addition to insurance, we identify opportunities for risk management improvements and provide timeline for execution of our recommendations. Unlike any other broker, the Alliant M&A team is an integrated, consistent team from letter of intent to investment, making sure there is nothing lost in translation at the first platform investment and for all add-on acquisitions.