M&A Insurance: Israel Market Update

Since the launch of the WTW M&A team in July 2022, we have seen significant developments in the Israel M&A insurance market.

Impact and Growth from 2021

The growth of Representation and Warranty Insurance (RWI) is consistent with the growth seen in US and UK deals (according to the ABA, the percentage of transactions in the US expressly referencing RWI increased from 29% in the 2017 study, to 52% in the 2019 study and to 65% in the 2021 study). While Israeli usage is still below the US and UK, usage of the product continues to increase year on year.

2021 saw record use of RWI on Israeli nexus transactions. The number of RWI policies being placed as a percentage of overall M&A in Israel continues to grow and is now contemplated on most Israeli M&A deals. This increase has been driven by greater familiarity of RWI in the Israeli market and an increase in the use of RWI on purely domestic transactions.

2022 Key Updates

While 2021 was a year focused on US investment in Israel, 2022 has seen a shift in landscape and more challenging times for Israeli and global technology companies. RWI continues to play a key role and many investors view RWI as a way of increasing protection and reducing risk in the current environment.

In 2022, we have seen the Israel RWI market continue to mature, including:

• Increased application of no seller indemnity structures.
• Following the WTW M&A delegation and discussions with insurers, increased insurer appetite for Israeli M&A, manifesting in lower pricing, falling retentions and broader coverage terms.
• Following the WTW M&A delegation, insurers agreeing to govern RWI policies by Israeli law where this follows the position in the SPA.
• Development of new M&A insurance solutions, including sell-side RWI. Increased use of seller stapled RWI.

Author

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Joshua Begner

Head of Private Equity and M&A, WTW Israel

email Email phone +972 54 6288284

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