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Mergers & Acquisitions Transactional Risk Report

Download the M&A Transactional Risk Report to get the latest trends and insights in Asia and globally.

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Marsh globally placed transactional risk insurance limits of US$49 billion on more than 2,000 policies across almost 1,200 unique transactions – representing over US$337 billion in aggregate enterprise value. 

A record year for Asia

Marsh Private Equity and Mergers & Acquisitions Services team in Asia placed a record 244 transactional risk policies – primary and excess – across 147 closed deals. This was an increase of 19% in policy placements and 32% in closed deals over 2022. These policies provide over US$6 billion in limits of liability for our clients, insuring transactions with an aggregate enterprise value exceeding US$35.9 billion. 

The proportion of deals in the region valued below US$100 million grew from 33% in 2022 to 46% in 2023. Corporate and strategic buyers increased their use of transactional risk insurance in 2023, relative to private equity buyers, growing from 42% to 46%. In terms of industries, manufacturing, energy, real estate, and communications, media, and technology were the most common sectors that utilised W&I insurance in Asia in 2023.

Asia claims notification patterns normalise after peak 2022

In 2023, Asia recorded 18 notifications across 13 standalone deals, representing a 15% increase in the number of deals with notifications compared to 2022. The severity of claims in Asia remained low. In terms of timing, a third of notifications were being recorded at the first-, second-, and third-year mark post-inception. 

Tax breaches continued to be the leading category of breach in almost all geographies, impacting 32% of all W&I claims notifications. Material contract breaches were alleged in 23% of notifications made in 2023. No financial statement claims were notified in 2023.

Read the full report for trends on Asia and the region’s individual markets.

Key highlights:

  • W&I Insurance market: W&I insurers entering the Asia market in 2022 and 2023 led to more competitive pricing, improved policy parameters, enhanced coverage, and increasingly streamlined processes. Beyond the softening of market conditions, Asia is experiencing an overall shift towards solutions and service levels that align more closely with those available in mature markets, like North America, UK, and Europe. 
  • Impact on insurance pricing: Average premium rate for Asia fell by 25%, from 2.3% in 2022 to 1.7% in 2023.
  • Impact on policy parameters: The competitive environment has generally driven insurers to offer more attractive retention levels than the standard fixed and tipping retention options falling in the range of 1% to 0.5% of enterprise value.
  • Impact on policy terms and conditions: Most coverage areas are being underwritten in a manner that aligns more closely with dealmakers’ expectations. For example, insureds can now commonly avoid blanket exclusions for product liability and defective services, provided an insurance specialist carries out insurance due diligence to confirm the adequacy of the target’s underlying insurance in such areas.
  • Impact on process: Insureds have benefited from underwriters’ efforts to streamline their processes and make them less onerous.
  • Japan: 62% year-on-year increase on annual deal count due to demand for domestically underwritten Japanese M&A policies. Average premium rates fell by around 20%, from 2.4% to just under 2%.
  • Southeast Asia: Deal activity across Southeast Asia progressively picked up throughout the year, resulting in a 16% year-on-year increase in our final deal count, with average premium rates falling by 30%, from 1.9% to 1.4%.

Read the full report for the outlook for 2024.