New ACE White Paper Examines Mergers & Acquisitions Risk Management Relative to Global Environmental Liability Issues

  New ACE White Paper Examines Mergers & Acquisitions Risk Management Relative
  to Global Environmental Liability Issues

Business Wire

PHILADELPHIA -- July 24, 2013

ACE USA, the U.S.-based retail operations of the ACE Group, today announced
the release of a white paper exploring the insurance and risk management
issues that global companies and private equity firms confront when seeking
strategic merger and acquisition growth opportunities in the marketplace, and
more specifically, when confronting ever-expanding and stricter environmental
liability laws and regulations. Such liabilities encompass a broad range of
perils, including pollution, contamination, mold, hazardous waste, and toxic
chemicals in water, air, or on land. Identifying these exposures, and
assembling an effective insurance strategy to transfer environmental
liabilities, is a vital element of the M&A transaction process.

“M&A Risk Management: Global Environmental Liability” was authored by Seth
Gillston, Senior Vice President, ACE Global Mergers & Acquisitions Industry
Practice; Scott Meyer, Executive Vice President, ACE Professional Risk and Jon
Peeples, Vice President, ACE Environmental Risk. Their new white paper
addresses global M&A and environmental liability trends in the context of
exposures for directors and officers, and examines ways to effectively manage
and transfer these risks.

Although the rate of global mergers and acquisitions has slowed in recent
years, M&A experts believe an uptick is forthcoming. According to Mr.
Gillston, “Certainly, for those companies with strong balance sheets, access
to inexpensive debt, and superior working capital management practices, M&A
will remain a core part of their strategic growth priorities, both
domestically and abroad. Companies seeking a stronger foothold in emerging
markets -- particularly within those countries that have liberalized foreign
ownership rules -- will continue to pursue M&A as a means of entry. In doing
so, they will confront compliance with a patchwork quilt of constantly
shifting environmental laws and regulations.”

In addition, Mr. Peeples observed that there are thousands of environmental
regulations pending approval from legislators and regulators around the world.
And, Mr. Peeples added, “These evolving legal and regulatory regimes pose
compliance risks for multinational companies acquiring and/or divesting
enterprises, as they require more in-depth due diligence for a target
company’s past and present environmental liabilities.”

At the same time, Mr. Gillston commented, “Directors and officers, along with
risk managers who are considering their companies’ and their own
post-M&A-transaction environmental liabilities, should aspire to leave no
ambiguities on the table.”

Finally, Mr. Meyer observed that, “The threat of share price volatility in the
months after a deal closes is typically higher -- possibly inciting
shareholder or subsequent-acquirer lawsuits against directors and officers,
for misrepresentations, breaches of fiduciary duties, or violations of the
securities laws. This enhanced financial exposure argues for accessing the
services provided by an experienced D&O insurer. Such carriers have a one-stop
shopping approach to insuring environmental risks and other liabilities,
inherent in a merger or acquisition. They offer the required responsiveness to
facilitate the closing of transactions within set timetables, thus minimizing
the possibility of an emergency of unexpected and uninsured post-transaction
liabilities. As M&A activity picks up, as anticipated, and more countries
enact broader and stricter anti-pollution laws, such liabilities are sure to
increase for directors and officers.”

As part of a thorough mergers & acquisitions insurance and risk management
program, acquiring companies should partner with an insurer who has
significant experience in managing a target’s environmental liabilities
obligations, in addition to the following key attributes:

  *An understanding of the applicable regulations
  *A specialization in this type of coverage, in order to thoroughly
    understand the risks involved in addressing collateral responsibilities
    from an efficient risk-transfer standpoint
  *An ability to identify environmental legacy liabilities in global mergers
    & acquisitions
  *Financial strength and an excellent reputation
  *The ability to offer a broad range of products
  *Worldwide coverage offerings, with locally admitted policies, for
    international companies

To access the report, please visit our website. The material presented in this
report is not intended to provide legal or other expert advice. It is
presented as informational only. Readers should consult legal counsel or other
experts, as applicable, with any specific questions they may have.

The ACE Group is one of the world’s largest multiline property and casualty
insurers. With operations in 53 countries, ACE provides commercial and
personal property and casualty insurance, personal accident supplemental
health insurance, reinsurance, and life insurance to a diverse group of
clients. ACE Limited, the parent company of the ACE Group, is listed on the
New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index.
Additional information can be found at: www.acegroup.com.

Contact:

ACE North America Communications
Carla Ferrara, 215-640-4744
carla.ferrara@acegroup.com
 
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