Mergers & Acquisitions: Don't Forget the Hidden Asset - Insurance

This article originally appeared in Anderson Kill's Securities Professional's Alert - An Insurance Perspective (July 2006).

Last month the Wall-Street Journal reported that abundant credit and laxer antitrust enforcement is creating a wave of global "megamergers." Blizzard of Deals Heralds an Era of Megamergers, WSJ page A1, June 27, 2006. Insurance policies represent a significant asset class that is often overlooked by the people putting together such deals. Deal makers typically spend a great deal of time negotiating the transfer of historic liabilities but little or no time on the insurance policies that will cover any pre-closing liabilities assumed. Whether the acquired company has liabilities resulting from securities transactions, financial activities, environmental damage, toxic torts, or professional activities such as healthcare, its insurance policies represent an important source of potential recovery for those losses.