Anna Craig has been working closely with Richard Winborn, Managing Partner of Themis Capital LLP, a newly created global managing general agent (“MGA”). Themis will be using data and technology to streamline the underwriting process, improve risk selection and promote product innovation.
Richard started his career as a corporate lawyer at DAC Beachcroft in London and successfully moved across to the M&A insurance market in 2008 when he was 3 years qualified. His first move was to Willis Towers Watson as a broker, before he became an nderwriter in 2010. He has held various roles within the market including the UK Head of M&A at Zurich Insurance plc, Head of Specialty Products at Liberty Specialty Markets and Head of International Mergers & Acquisitions at XL Catlin. Last year, Richard partnered with Innovisk to launch a new MGA focused on the provision of M&A insurance and has worked closely with Anna Craig to recruit his team members. As a result of this collaboration, Anna Craig has gained an insight into M&A underwriting and its need for experts such as Corporate and Tax lawyers.
This article is a result of her findings.
What is Mergers & Acquisitions Insurance and why is it on the rise?
M&A insurance is the umbrella class of business that encompasses various insurance products targeted at the M&A community. Principally, these are Warranty and Indemnity (W&I) insurance and Tax Liability Insurance.
W&I insurance is a specialist insurance product designed to cover breaches of warranties or indemnities given in the sale of a business. In the past few years, W&I insurance has risen hugely in popularity and is now used in a wide variety of deals and has played a significant part in allowing many deals to be completed. Research suggests its use has more than doubled between 2011 and 2018. This is primarily driven by the economics that using insurance has for parties exiting a deal, as well as the strategic advantages it has of creating a clean exit and differentiating bids in a competitive auction process.
This popularity, coupled with an increased level of M&A activity, has brought more carriers to the market and thus a higher demand for underwriters to underwrite these risks.
Why are Insurance companies looking to recruit lawyers for underwriting positions?
Insurance companies know that M&A or Tax lawyers can add huge value to underwriting teams because of their in-depth knowledge of the documentation and legal issues involved in a transaction, great attention to detail and work ethic. Not only will they be able to quickly and correctly assess the risks involved in a transaction and advise the client accordingly, but their detailed knowledge and legal insight will be an advantage in gaining new business.
Why is becoming an underwriter attractive to lawyers?
Underwriting offers an attractive alternative career path for senior solicitors at a crossroad between choosing to become a Partner and going in-house, although junior lawyers are also making the leap early on in their careers. Below are some of the reasons why:
1. Broader role.
Underwriters get a broader understanding of a corporate transaction. They need to develop legal, financial, tax and other relevant business skills that will enable a logical and in-depth review of risks associated with the ownership, financing and operation of a broad range of businesses.
2. More client contact.
In addition to reviewing and negotiating documents, W&I teams attend regular client meetings and marketing events. They will also need to maintain and develop relationships with various distribution channels including brokers, law firms, investment banks, accountants, private equity funds and corporates on the acquisition trail or going through the disposal process.
3. Faster pace.
Underwriters often work on more deals at any given time than lawyers would do in private practice. However, they do so at a more macro level and across various sectors. W&I underwriters still maintain drafting and negotiating skills when working on policies, but they would no longer draft the actual suite of transactional documents, which they would review instead.
Anna Craig, recruitment consultant at EJ Legal and former City lawyer, specialises in placing lawyers in the insurance sector. She has experience helping clients and candidates alike with their requirements and has built a strong track record within the insurance sector. She would be happy to advise businesses looking for lawyers to join their M&A underwriting teams or in-house legal teams and lawyers who want to take the leap into the insurance world.