Annual Transactional Risk Report

Demand for transactional risk insurance, predominantly warranty and indemnity (W&I) or representations and warranties (R&W) insurance but also including tax and contingent liability insurance, surged during 2014, with a 36% increase in policies placed, and a 51% increase in limits placed by Marsh. Record demand in mature M&A markets such as the US and the Nordics, combined with continued increasing awareness and usage in emerging markets, helped drive these historic results.

Emerging markets in particular continue to embrace the solution, as investors and sellers look to reduce cross-border deal risk. The solution is now available in Latin America and we saw wider use in Asia. Marsh brokered the first locally issued policy in Malaysia, Mexico, the Philippines, and Saudi Arabia during 2014.

Similar to previous years, financial sponsors such as private equity firms, remained the most frequent users of transactional risk insurance solutions, driven by a desire to execute liability-free exits. Asia-Pacific was the only exception to this trend, where acquisitive corporations were the most active users of transactional risk insurance.