Our insurance and risk specialists in the mergers and acquisitions (M&A) group includes a dedicated private equity (PE) team that works with more than 450 different private equity firms, including distressed and turnaround investors and their portfolio companies. The team stands out in the world of leveraged buyouts because we have a keen understanding of the goals of both private equity owners and portfolio companies.
We understand the importance of certainty of cost and of insurance coverage for buyout funds and their portfolio companies to enhance earnings and protect the investment. We are prepared and qualified to support private equity owners in making critical risk management decisions with leverage.
Fund liability and portfolio D&O liability – Designed for PE firms
Given the highly specialized nature of these programs, the structuring, marketing and administration of fund liability and portfolio company D&O programs is managed entirely by a dedicated team within the WTW Private Equity and Transactional Solutions group. Our team is comprised of highly technical brokers with skill sets not customarily seen in the insurance brokerage space. This expertise provides our team with significant depth and competence. Team members have expertise in the private equity segment, leading the industry in drafting bespoke contracts tailored to funds and their portfolio company’s unique exposures.
We’ve designed a fund liability and portfolio purchasing protection program that addresses the special coverage needs of PE firms including:
- General partnership liability/directors’ and officers’ (D&O) liability
- Fund management activities/professional services liability
- Outside directorship liability (ODL)
- Investigations liability
- Employment practices liability
- Fiduciary liability
Potential fund litigation exposures
- Sponsor vs. sponsor litigation
- Justice Department, Securities Exchange Commission, and state attorney general investigations
- Limited partnership claims
- Portfolio company claims
- ODL claims
- Portfolio company creditor claims
- Employment practices liability claims
An insurance purchasing strategy is a strategic approach to risk management that has been utilized to improve negotiating power with insurers, enabling private equity firms to secure more favorable terms and conditions. Additionally, by consolidating property & casualty insurance coverage across the portfolio, efficiencies are gained, driving down costs and enhancing overall risk mitigation.
Property & casualty – group purchasing benefits
- Premium spending synergies consolidating the various insurers
- Protection against changes in market fluctuations
- Consistency of coverage throughout the portfolio
- Leverage available for payment of difficult claims
- Acquisitions can be rolled into preexisting insurance facilities
Casualty
- Aggregation will enable greater discounts to pricing models
- Diversity of portfolio can be addressed by approaching one market will assume as much of the portfolio as possible, while utilizing other insurers as necessary
- Higher limits of liability are available at competitive costs
Property
- One broad manuscript master policy
- Coverage on master policy for all perils, including earthquake, flood, wind, boiler and machinery coverages
- Policy will afford greater sub limits to coverage, specific coverage improvements and consistency across all portfolio companies
- Each portfolio company is provided with an endorsement which specifies named insured, deductibles, allocated costs and special terms and conditions
