Allianz to Guard Dealmakers Against M&A Surprises in U.S. Push

  • Insurer plans to expand coverage to Asia, Europe in future
  • Policies will protect against inaccuracies about target firms

Allianz SE, Europe’s largest insurer, is expanding in North America to guard commercial clients against risks in dealmaking.

The insurer will offer coverage to protect buyers from losses tied to inaccuracies during negotiations with companies that they eventually acquire, Munich-based Allianz said Wednesday in a statement. The firm is partnering with Euclid Transactional LLC, which underwrites liability insurance, for the effort in the U.S. and Canada and plans to bring the offering to Asia and Europe “in the near future.”

Allianz has been focusing on business coverage in the U.S. after striking a deal in 2014 to sell Fireman’s Fund, the insurer of luxury homes and yachts, to Evan Greenberg’s Ace Ltd. The German company opened a financial lines division in North America last year, hiring Paul Schiavone from Zurich Insurance Group AG to lead the business. The company said the timing is right for the push into so-called transactional-liability coverage, given the pace of mergers and acquisitions.

“Buyers and sellers are not always forthcoming about business operations and inherent risks,” Allianz said in the statement. “Post-sale disputes are common and financial issues surface. To help alleviate such matters and facilitate the process for a merger, acquisition, divestiture, or other business transaction, parties are increasingly purchasing transactional liability insurance.”

Berkshire’s Move

Warren Buffett’s Berkshire Hathaway Inc. said Tuesday that it hired a team for similar coverage, adding Robert Underhill from law firm Locke Lord to lead the operation. Greenberg’s company, which was renamed Chubb Ltd., is among companies that have also sought to expand in the market, along with American International Group Inc. and XL Group Plc.

Allianz said use of the coverage more than tripled from 2011 through 2015, with North America accounting for most of the growth last year. The volume of mergers and acquisitions climbed to a record last year, and the insurer cited the possibility that easy access to credit will fuel more deals.

“Given the continuously active and strong M&A landscape, we are excited to build a long-term partnership with some of the most respected underwriters in the industry and look forward to expanding our transactional and private equity related offerings,” Schiavone said in the statement.

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