Welcome to Advisen s Transaction Insurance Insights Forum!
Welcoming Remarks David Bradford Co-Founder & Chief Strategy Officer Advisen
Thank you to our Advisory Board Jeffrey Anderson, Allied World Jeffrey Cowhey, Ambridge Partners LLC Mary Duffy, AIG Matthew Heinz, Aon Peter Rosen, Latham & Watkins [2016 Conference Chair] Mark Rusas, Willis Towers Watson
Thank you to our Host Sponsor
Thank you to our Sponsors!
Opening Remarks Peter Rosen Partner Latham & Watkins [2016 Conference Chair]
Marketplace Metrics
Marketplace Metrics Peter Rosen Partner Latham & Watkins (Moderator)
Marketplace Metrics Peter Rosen, Partner, Latham & Watkins (Moderator) Jeffrey Anderson, North American Mergers & Acquisitions Group Lead, Allied World Matthew Heinz, Managing Director, National Practice Leader Transactional Liability, Aon Edward Markovich, SVP, Transactional Risk, Chubb Craig Schioppo, Transactional Risk Practice Leader, Managing Director, FINPRO, Marsh
Marketplace Metrics
The Buyer s Perspective
The Buyer s Perspective Bill Monat EVP Mergers & Acquisitions Group Willis Towers Watson (Moderator)
The Buyer s Perspective Bill Monat, EVP Mergers & Acquisitions Group, Willis Towers Watson (Moderator) Joshua Aronson, Senior Vice President & Deputy General Counsel, Audax Group John Giouroukakis, Partner, Latham & Watkins Thomas Kim, Global Risk Manager, KKR John Merrigan, Managing Director, US Insurance Risk Management Solutions Lead, PricewaterhouseCoopers LLP
The Buyer s Perspective
Morning Break Coming up next International Issues
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Thank you to our Sponsors!
International Issues
International Issues John McNally Transaction Advisory Practice JLT Specialty USA (Moderator)
International Issues John McNally, Transaction Advisory Practice, JLT Specialty USA (Moderator) Peter de Boisblanc, Associate, Ropes & Gray LLP Angus Marshall, UK M&A Manager, AIG Tan Pawar, Senior Vice President of Mergers & Acquisitions, Paragon Brokers Craig Warnke, Managing Director, Marsh
International Issues
Beyond Reps & Warranties
Beyond Reps & Warranties Michael Schoenbach Managing Director Aon (Moderator)
Beyond Reps & Warranties Michael Schoenbach, Managing Director, Aon (Moderator) David De Berry, CEO, Concord Specialty Risk Seth Gillston, Executive Vice President, M&A and Private Equity Practice Leader, Chubb Roy Reynolds, Divisional Senior Vice President, Great American Insurance Group Brian Thede, President, Healthcare Risk Assessments
Beyond Reps & Warranties
Conference Luncheon Coming up next The Claims Process
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The Claims Process
The Claims Process Nancy Adams Member Mintz Levin (Moderator)
The Claims Process Nancy Adams, Member, Mintz Levin (Moderator) Markus Bolsinger, Partner, Dechert LLP Mary McIvor, Global Head of Financial Institutions Claims, AIG Diane M. Parker, Vice President, North American Claims Group, Allied World Dan Torpey, Partner, Fraud Investigative & Dispute Services, EY
Claims Study Who is Making the Claims? First Party vs. Third Party What are the Claims? Financial Statements, Tax, Accounting, Contracts, Where are the Claims? US vs. Global When are Claims Being Made? Why are Claims Being Made? Indemnities, Retentions, Escrows 32
Investigations of Claims Part One The Initial Claim Review: Policy, acquisition agreement, underwriting file Claim documents Other insurance Meeting/interview with insured & representatives Determining what documents exist 33
Investigations of Claims Part Two Complexity of investigation depends on: First-party or third-party claim Insured buyer or insured seller Type of misrepresentation (e.g., accounting issue v. working condition of tractor) 34
Coverage For Claims: Key issues to be investigated: Whether there was a breach of a R&W Whether the loss was a proximate result of the breach How to quantify the amount of the loss Are there any applicable exclusions? Deductibles, Retentions and Indemnities 35
The First Question Was There a Breach? Reps that are frequently at issue Disclosure schedules Analysis of Breach: a/k/a Not Every Post-Closing Surprise is a R&W Breach 36
What Should You Expect It Depends: Financial misrepresentations: Forensic Accountants and Other Experts Documents to be reviewed Analysis, Time Frame, Common Issues Other first-party claims Third-party claims 37
Case Study Post Acquisition Dispute Buyer had an acquisition insurance policy excluding NWC true-up Buyer identified higher liabilities after acquisition Buyer took seller to arbitration and received a settlement for higher liabilities above NWC true-up Buyer then tried to utilize their insurance policy by turning the higher liabilities into an expense issue This moved the issue from the balance sheet as NWC to income Buyer claimed the value of the company was lower due to lower income 38
Coverage Dispute: Arbitration or Litigation? Pros and Cons Interplay with Purchase Agreements Settlements 39
Subrogation? Interplay with Purchase Agreement Can we Say "Fraud or Bad Accounting" Trends in Anti-Fraud Due Diligence Who Brings the Claim 40
EY 2016 Fraud Survey - Justifying unethical behavior and misconduct Our survey found that some executives continue to justify unethical acts to improve a company s performance. When presented with a series of options, more than one-third would be willing to justify inappropriate conduct in an economic downturn, while almost half would justify such conduct to meet financial targets. While the behaviors that these respondents can rationalize differ between regions, they should be deeply concerning to all companies. 41
The Fraud Triangle Changes in workforce roles & responsibilities may impact internal control oversight Effects of decentralization on internal controls Opportunity Organization may be trying to do more with marginal increase in resources Multiple acquisitions with unique data and financial systems Increased pressure associated with financial leverage Periodic reporting requirements to external stakeholders Pressure Internal and External Pressure Opportunity to Commit Fraud Internal Controls Rationalization Overworked and newly acquired employees may have greater ability to rationalize improper actions 42
The Claims Process
Afternoon Break Coming up next Growing Pains
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Growing Pains
Growing Pains David Bradford Co-Founder & Chief Strategy Officer Advisen (Moderator)
Growing Pains David Bradford, Co-Founder & Chief Strategy Officer, Advisen (Moderator) Jeffrey Cowhey, Co-Founder & President, Ambridge Partners LLC Matthew Somma, Underwriting Specialist, Transactional Risk, The Hartford Howard T. Spilko, Partner, Kramer Levin Naftalis & Frankel LLP R. Philip Stevenson, Senior Vice President, VALE Insurance Partners
Growing Pains
The Broker s Perspective
The Broker s Perspective Dennis Kearns SVP, Transactional Liability and Financial Institutions QBE North America (Moderator)
The Broker s Perspective Dennis Kearns, SVP, Transactional Liability and Financial Institutions, QBE North America (Moderator) Stacey J. Hammer, Vice President, Privacy Equity and Corporate Acquisitions Practice, Lockton Companies Jeff Rubocki, Senior Managing Director, Krauter & Company Mark Rusas, EVP Global Practice Leader, Mergers & Acquisitions, Willis Towers Watson Kirk Sanderson, Senior Vice President, Transaction Risk Practice Leader, Equity Risk Partners
The Broker s Perspective
Closing Remarks & Reception