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ביטוח לעסקאות מיזוג ורכישה Aig

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  • 1. ‫‪ AIG‬ישראל‬ ‫+‬‫7991‬ ‫2002‬ ‫6002‬
  • 2. ‫‪ AIG‬ישראל‪Facts & Figures‬‬ ‫הינה ישות משפטית עצמאית מפוקחת‬ ‫‪ AIG‬ישראל‬ ‫פוליסות ביטוח בתוקף ב-‪ AIG‬ישראל‬ ‫000,004‬ ‫מחזור הפרמיה השנתי בשנת 0102‬ ‫כ-007 מיליון ₪‬ ‫סך הרווח הנקי בשנת 0102‬ ‫כ-65 מיליון ₪‬ ‫סך ההון העצמי (נכון ליום 01.21.13)‬ ‫כ-573 מיליון ₪‬‫סך עודף ההון העצמי מעבר לדרישות הפיקוח‬ ‫(נכון ליום 01.21.13)‬ ‫כ-92 מיליון ₪‬
  • 3. Truly Global Franchise Europe 2010 NPW: $5.8BN U.S. and Canada2010 NPW: $17.2BN Far East 2010 NPW: $7.3BN Growth Economies 2010 NPW: $3.0BN o 4 major regions: U.S. and Canada, Europe, Far East, Growth Economies o 9,000 claims professionals worldwide
  • 4. Chartis OverviewChartis is a global P&C market leader with over $33 billion in 2010 NPW1o History: 90 years of underwriting experienceo Truly Global: 48% of premiums written outside of the U.S. and Canadao Diversified: 62% commercial and 38% consumero Experienced: average senior management tenure = 20 yearso Innovative: over 200 new products and services launched in 2010o Strength: 43,000 employees worldwide 2010 NPW by Chartis 2010 NPW: $33.4BN 2010 NPW by Geography Business Segment Far East, Other / Personal, 22% Service, 2% 20% Growth Europe, Economies, 17% Life, 2% 9% Specialty, 27% Casualty, U.S. and 25% Canada, 52% Property, 10%
  • 5. Introduction to Warranty and Indemnity InsuranceMergers & Acquisitions Insurance GroupAndrew Graham & Janine Fenwick
  • 6. Agenda• Who we are• What is Warranty and Indemnity Insurance?• Insurance Process  Coverage & exclusions  What the Insurer needs• Claims 6
  • 7. Introduction – who are we? Largest, longest established and most experienced team in the global transactional insurance market; Provide bespoke insurance solutions for transactions - Warranty & Indemnity. Our global team of seventeen underwriters consists of corporate lawyers and litigators drawn from private practice and based in the UK, Sweden, Germany, France, Spain, Italy, Hong Kong, Australia and USA; We have global capacity with offices in over 130 countries; and Globally over the past 12 months we have placed insurance on in excess of 160 transactions (ex North America) in 28 different jurisdictions. 7
  • 8. What is Warranty & Indemnity Insurance?• We insure loss arising from breaches of the warranties or indemnities given by the seller in an acquisition.• We can insure either the buyer or the seller.• We insure either: • share sales (assets and liabilities) - extensive warranties • asset sale only - more limited warranties• Premiums are generally 1.5% to 3% of the limit (subject to minimum premium of USD75K).• The policy will generally take a minimum of five working days to underwrite and bind from receipt of all requisite information and documentation. 8
  • 9. Sell – Side Policy •Insured: The warrantors •Objective: To provide coverage in the event that the buyer Sale & Purchase sues the seller for a breach of warranty or indemnity Transaction Agreement value •Structure: Can insure up to the warranty cap as defined by the sale document Buyer’s •Policy of indemnity: Seller still retains liability under sale document, therefore is liable for any breach not picked up by the insurance policy risk Limitation Policy of liability limit for breach of warranty under the SPA Seller’s Policy of indemnity Insurance risk policy 9
  • 10. Buy - Side Policy •Insured: The buyer •Objective: To provide coverage against financial loss suffered as a result of a breach of the seller’s Sale & Purchase Agreement warrantiesTransaction value •Structure: Warrantors give warranties but these are capped at a lower amount, the insurance policy sits in excess of this Policy limit (buyer’s Buyer’s risk appetite to determine risk Policy to Insurance limit) protect against financial loss policy Limitation of liability for breach of warranty under the Seller’s •First party policy: Policy is independent of the seller, SPA risk therefore the buyer is entitled to make a claim directly against the policy 10
  • 11. Motivations for InsuranceSeller Side• Sellers unwilling or unable to give financial support behind warranties e.g. secondary buy-outs, acquisition from insolvent sellers;• Reluctance of sellers to retain proceeds in escrow;• Optimising a “clean” exit;• Sale under a turnaround situation.Buyer Side• Investing in new or unfamiliar jurisdictions or industry sectors;• Enhancing bidder status;• Alternative to contractual recourse for a particular issue;• Best practice risk management / corporate governance;• Comfort to debt finance providers. 11
  • 12. W&I Insurance - Policy Cover Bespoke policy tailored to the transaction Back-to-back with the SPA– Covering breach of insured warranties - aim for full cover– Duration matches survival period under SPA at a minimum– Matching de minimis/thresholds under SPA Covering defence costs Covering fraud by the seller on a buyer-side policy No requirement to pursue the seller before claiming under the policy on a buyer-side policy 12
  • 13. W&I Insurance – the policy exclusions ✗ Known issues )i.e. matters in the disclosure letter/buyer’s due diligence) ✗ Completion account adjustments ✗ Fines and penalties to the extent they are uninsurable by law ✗ Fraud by the seller on a seller-side policy ✗ Forward-looking warranties ✗ Potentially transaction specific issues 13
  • 14. Submission – what we need to see a) Details of the Buyer and Seller b) Details of the Target business c) Transaction value d) Limit of indemnity sought - Chartis capacity up to USD60,000,000 e) Retention insured is prepared to accept - N.B market standard is 1% of transaction value f) Does the insured want cover for both the warranties and a tax covenant (if applicable) and any other transaction specific indemnities that are being given by the Seller. g) Estimated signing or completion date of the transaction h) Attach the following documents:  SPA  Disclosure Letter  Tax Covenant/Deed (if there is one)  Due diligence (not always available on Seller side)  Data room index 14
  • 15. Underwriting process Day 1 Initial submission Internal review Heads of terms Engagement letter Detailed underwriting Deal Signs Policy Ideally this will be about Negotiate cover review 14 days, but is has been between 2 days and18 months Binding policy 15
  • 16. Underwriting Considerations  Identity of the buyer and seller and their advisors  Target business and location  Quality of the transaction process  Value of transaction  Scope of the insured warranties - buyer or seller friendly?  Seller’s liability under the SPA  Gap between signing and completion?  Why do they want insurance?  Do both parties know about insurance? 16
  • 17. Claims: Warranties alleged to havebeen breachedA majority of alleged breaches relate to financial statements warranties Environmental Financial IP 6% Statements 9% 32% Multiple 25% Tax 28% 17
  • 18. Claims ScenariosPatent Infringement – Seller-side policy responds to a claim brought against the seller for breach of the intellectual property warranties resulting from a third party claim of patent infringement – Chartis paid USD1.5million in settlement and expenses to resolve the claimMultiple Breaches – Buyer-side policy responds to a claim brought by the buyer against the W&I policy for alleged breaches of the warranties regarding financial statements and operation of the business in the ordinary course. – Buyer also sued the Seller for some of the breaches. Chartis contributed to the Buyer’s overall recovery with over USD1m in settlement and expensesChange of Control – Buyer-side policy relating to a breach of the warranties relating to change of control and contractual arrangements with key customers. Seller was fraudulent. – The buyer made a claim under the policy for USD7 million and following negotiations with the buyer, Chartis agreed to pay USD5 million in settlement and expenses to resolve the claim. 18
  • 19. Any questions 19
  • 20. Mergers & Acquisitions Insurance Group Chartis Europe Limited You can find further information about our M&A Insurance Group and our products on our homepage http://www.chartisinsurance.com/_911_217012.html Please feel free to contact us to discuss any questions you may have about our products.Andrew Graham Janine FenwickEuropean Manager Growth EconomiesTel: +44 20 7954 8558 Tel: +44 20 7954 8840andrew.graham@chartisinsurance.com janine.fenwick@chartisinsurance.com 20