Independent Insurance Due Diligence

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Private Equity & M&A

Independent Insurance Due Diligence

Matrix work with Private Equity houses, Advisories, Financial Institutions and Corporate Management teams to provide an independent Insurance Due Diligence (IDD) solution for M&A investments worldwide that delivers a comprehensive, technical review that provides consistency, and most importantly reassurance, in this critically important area.

Undertaken by our in-house specialists, able to call upon the widest range of support and advice and apply the right skill sets and knowledge of a company’s sector, Matrix is not an Insurance Broker and do not provide ‘off the shelf’ solutions, Matrix has no vested interests or allegiances, our independent and totally transparent IDD provides:

  • Comprehensive technical review of the company’s programme addressing cover, service and premium;
  • Forensic examination of all technical and operational documentation;
  • Identifies issues to be addressed pre- and post-completion to correctly protect the investment, and;
  • Strategic analysis of the options available to optimise the insurance programme;
  • Holistic oversight of all insurance policies, the impact of a transaction on the insurance programme and highlights potential pitfalls and solutions.

Matrix’s independent status ensures that the IDD report is free of any external agenda, the Transaction and its impact on the insurance programme is assessed impartially. Matrix is able to work with existing management and/or current brokers or alternatively project manage the sourcing and appointment of alternative brokers, to provide certainty of coverage and the knowledge that there will be no surprises further down the line, allowing management and investors to focus on the business secure in the knowledge that the Insurance programme will respond as and when required.

Buyers / investors and internal management teams can be confident that the Target has the correct insurance programme in force for its risks. Where deficiencies in the programme are identified as part of the IDD process, a clear roadmap to resolve these is provided, allowing the Target to secure the best possible outcomes at future renewals, enabling management and investors to focus their attention on the business itself.

The Matrix IDD Process

Matrix follows 6 key steps to ensure we deliver the independent perspective our M&A clients require to enhance the transaction process, aid deal negotiation and identify value-added opportunities, whilst simultaneously highlighting the key areas of concern ahead of the transaction.

Step 1 – UNDERSTAND

  • The Target / Company’s Business and Risk Profile
  • Its operations, products / services and territories
  • Current insurance purchasing strategy and aims

Step 2 – ASSESS

  • Key Risks exposures including; operational, supply chain, environmental, contractual and statutory risks
  • Quality of existing insurance and risk management relationships and the total cost of risk of the current insurance programme

Step 3 – REVIEW

  • Existing insurance programme and structure including; key exclusions, conditions and warranties
  • Existence of legacy cover
  • Current and historical loss history and analysis of any potential trends
  • Impact of change of control

Step 4 – MAP

  • Key risks against the existing insurance programme, highlighting uninsured and under-insured risks
  • Existing insurance programme against best-in-class / industry standard

Step 5 – REPORT

  • Issue an IDD report providing an independent comprehensive technical review of the existing insurance programme and the impact of the transaction
  • Opinion on the adequacy of the existing insurance programme benchmarked against industry standards
  • Identification of additional potential insurance solutions
  • Recommendations for improvements / solutions to identified gaps/ inadequacies, potential cost implications and necessity for additional coverage, with priority grading for key risks
  • Action plan for key pre- and post-completion actions

Step 6 – IMPLEMENT

  • Follow up
  • Project Management assistance with Warranty & Indemnity (W&I) placement, KeyPerson insurance, transition of insurance programme coverages and/or potential broker changes

The output is an independent Inusurance Due Diligence report that can aid deal negotiation, identify value-added opportunities and most crucially, provide reassurance to the buyer.

Contact Alison Roome, Managing Director M&A

Alison Roome

E: aroome@matrixglobal.co.uk
T: +44 (0)203 457 0916
M: +44 (0)7506 247629