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Transactional risk report: Latin America

Both buyers and sellers continue to explore using transactional risk insurance in Latin America, despite the limited market in the region for these types of policies.
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02/25/2022

Both buyers and sellers continue to explore using transactional risk insurance in Latin America, despite the limited market in the region for these types of policies. Marsh placed policies in 2021 for assets in Latin America, including on risks located in Brazil, Colombia, Mexico, Argentina, Chile, Guatemala, Puerto Rico, and Uruguay. Although, at present, there is no local underwriting capacity in the area, more than nine insurers have expressed interest (via their hubs in New York, London, and Spain) in underwriting Latin American transactional risk. Given the high levels of M&A activity in the region in 2021 — Refinitiv estimates mergers and acquisitions in Latin America reached above US$105 billion in the first nine months of the year, the highest volume in a decade — new entrants into the space are expected over the course of 2022, resulting in increased capacity. Generally, purchase agreements with a North American, European, or Asian buyer — written in accordance with either New York, English, or Spanish law — tend to be more insurable. Premium rates are usually higher than those in the North American market — ranging between 5–7% — given the higher risk associated with M&A activity. Policies normally include exclusions for corruption, in addition to market exclusions and heightened examination of tax and labor issues.

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Transactional risk report 2021 : North America

Amid the extensive M&A growth in the region, Marsh placed coverage for 999 transactions in 2021 — a 71% increase on the previous year.
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Transactional risk report 2021: EMEA

In 2021, there was a significant increase in the use of transactional risk insurance in Europe, the Middle East, and Africa (EMEA), driven by the underlying record M&A volumes in the region.
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Transactional risk report 2021: Asia

Asia saw a large uptick in M&A activity in 2021 in line with the rest of the world, resulting in a capacity shortage in the region’s W&I insurance market. This, in turn, led to a general increase in average rates.
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Transactional risk report 2021: Pacific

M&A activity involving Australian companies in the Pacific region totaled $329.2 billion in 2021, according to Refinitiv. this represents a nearly six-fold increase compared with the preceding year, eclipsing the previous high-water mark of $139 billion set in 2007.

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“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”