JLT's look into Mining risks - Mergers and Acquisitions

30 August 2016

An influx of new players into the mergers and acquisitions (M&A) insurance market is creating greater choice and improved terms and conditions for insurance buyers. In 2015 the M&A insurance market underwent another year of exceptional growth, with a 45% increase in written premium compared with 2014. There are now 16 insurers offering M&A insurance in UK and Europe, with up to USD1 billion of capacity available per deal – more than double what was available two years ago.

While 2015 experienced a temporary contraction in capacity as underwriters moved between insurers, a healthy level of competition has returned. Rate on line has started to fall in 2016 – some deals are achieving prices of 1 per cent compared with the more usual 1.5 per cent. Competition has also resulted in a reduction in retention levels, and some real estate insurance buyers have even achieved zero retention rates.

Insurance has become an established part of M&A transactions across a range of sectors although the mining industry to date has not utilised the M&A market to its advantage. As mining M&A activity increases, strategic use of this market could provide a competitive advantage.

Tips for buyers

The M&A insurance market has grown significantly in the past year, making it even more challenging for buyers to assess the greater number of options and insurers. Assistance and advice to understand the market and insurer differentiation is essential to get the best solution.

For further information, please contact Teresa Jones, Partner, Mergers & Acquisitions on +44 20 7558 3257 or email teresa_jones@jltgroup.com

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contact Teresa Jones
Partner, Mergers & Acquisitions