As merger interest cools, M&A insurance is cheaper

The M&A insurance market is cooler now than ever before, The Wall Street Journal wrote on Wednesday (April 13).

This comes after an overheated market during a busy buying season in late 2021.

Companies seeking insurance to help protect against the risks inherent in making a deal should expect lower prices and a greater ability of insurance staff to help them with various requests, experts say. Jodi Rosensaft, managing director in transactional risk practice at Marsh LLC, said “they’re not seeing that kind of pressure, both in pricing and availability, that we were.”

The WSJ wrote that deal activity in 2021 reached record levels for a number of reasons, including low interest rates and growth in private equity fundraising.

Total global M&A activity last year was up 64% from a year earlier, reaching about $5.9 trillion, Refinitiv reported.

That came as the busy period exhausted the insurance industry’s ability to deal with the various policies companies were seeking. The WSJ writes that employees were overworked and could not keep up with all the demand.

Rosensaft said last year was something of an “aberration” in the flow of M&A deals across sectors, deal categories and transaction sizes.

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