At this time of great uncertainty, AXIS is committed to providing the underwriting expertise and claims service our clients and distribution partners deserve and expect. To help protect the safety of our team members, business partners and communities, our colleagues globally are working remotely. In addition, we have paused business travel across the entirety of our company.
We are fully operational with our teams using virtual meeting and collaboration tools to stay connected internally with our colleagues and externally with our clients and distribution partners. And we are prepared to address the concerns that may arise for our clients and partners in distribution.
We are monitoring COVID-19, and the guidance from the World Health Organization and government authorities in every region in which we have operations and critical vendor support. We are committed to protecting the health and safety of our colleagues while continuing to deliver superior client service and responsiveness.
We are grateful for the continued trust and partnership of our clients and distribution partners. Please contact us as you normally would with any questions or needs you may have in the coming days and weeks.
The excerpted article was written by ERICA ALINIGLOBAL NEWS
Australia’s devastating fires have already destroyed nearly 1,900 homes, but they’re just one of the many types of hazards facing homeowners.
Climate change is raising the frequency and severity of a number of natural disasters, from flooding and cyclones to soil subsidence, which causes structural damage when clay soils start to contract during prolonged periods of drought.
The increased risk has implications for insurance and beyond, according to climate risk analyst Karl Mallon. A recent report from his firm, Climate Risk, projects that 720,000 homes, or five per cent of Australia’s housing stock, will be uninsurable by 2100 as coverage becomes unavailable or prohibitively expensive.
That kind of analysis has caught the attention of lenders. Two of Australia’s largest banks have recruited Mallon to help them assess how climate-related risks might affect their mortgage portfolios. One of them projected that increased insurance costs would increase its share of high-risk mortgages 10-fold in the span of around 40 years, from 0.01 per cent in 2018 to 0.1 per cent by 2060.
Data on exposure to flood risk is already driving decisions about whether to issue mortgages in some cases, Mallon said.
Over time, Mallon sees areas where getting a mortgage will become very difficult. The risk for those properties is that they’ll become hard to sell and eventually decline in value, he added.
The link between natural disasters, insurance and mortgages may be emerging in Canada as well. In both Australia and Canada, however, the issue seems to be centred around flooding for now.
Australia bushfires: Why the situation is likely to get worse
Australia bushfires: Why the situation is likely to get worse
What about fires?
Whether Australia’s extraordinary fire season will have an impact on insurance premiums remains uncertain.
For one, it’s only the beginning of the summer Down Under, and Australians are holding their breath for what the rest of the season might bring.
Until now, though, “bushfires traditionally have been no cause for concern on the insurance front,” Mallon said.
That’s because even though Australia is prone to fires, they haven’t caused damage on a scale that insurers would consider “an unacceptable probability,” he added.
It’s too soon to tell whether the current fires will change that.
Fire and water are significantly different beasts in the world of home insurance, said Rob de Pruis of the Insurance Bureau of Canada.
Overland flood insurance, which covers damage from water flowing above ground and seeping into buildings through doors, windows and cracks, only became available in 2015 in Canada. Its introduction was largely an industry response to the 2013 southern Alberta floods, which resulted in $6 billion in damages, of which just $1.7 billion was covered by insurance.
Damage from sewer backup is also a growing issue for insurers. They are facing both an increased likelihood of flooding caused by flash rain, which has been linked to climate change, and higher repair costs, partly because finished basements have become more common.
Home insurers are also struggling with a lack of up-to-date information about where flooding is likely to happen, although the government is working on updating Canada’s flood-risk maps, de Pruis said.
Severe flooding is also happening with increasing regularity, a problem for insurance, which is meant to cover events that are “infrequent and unforeseeable,” de Pruis said.
Fire, by contrast, is a familiar hazard to the home insurance industry, which traces its origins to the Great Fire of London in 1666, which nearly destroyed the city. Coverage for fire damage, including from wildfire, is standard in any home insurance policy.
Extensive losses from fires, on the other hand, have remained relatively rare in both Canada and Australia so far.
In Australia, for example, it usually takes several years after a bushfire for vegetation to grow back to a point where there is fuel for another fire, Mallon said.
In Canada, even the Fort McMurray fire of 2016, the most expensive event for insurers in modern Canadian history, did not shake the industry.
Canada’s domestic insurance companies had their own insurance to fall back on, something known as re-insurance, according to de Pruis. And the $3.7 billion in insured damages claimed by the Alberta blaze remain a relatively small price tag for the trillion-dollar giants of the global reinsurance market, which have seen natural disasters billed at tens of billions of dollars in other parts of the world, de Pruis said.
And for now, de Pruis added, there is just not enough information to predict the future of wildfires in Canada.
But experts warn climate change is helping make wildfires worse.
The research report presents a deep review of the Global Mobile Phone Insurance Ecosystem Market comprises of objectives analysis. The following segment centers around Mobile Phone Insurance Ecosystem market size, country-wise production revenue ($) and development rate estimation from 2019-2024.
The report additionally covers global Mobile Phone Insurance Ecosystem market share by industry players, product and applications. The report enables investors to evaluate the market, featuring the upcoming business opportunities, mindful of Mobile Phone Insurance Ecosystem industry news and arrangements by countries, technological development, limitations and difficulties in estimate years (2019-2024) and settle on a fundamental business decision.
Market Segment by Type, the product can be Split into:
Market Segment by Application, Split into:
Theft & Loss
The Global Mobile Phone Insurance Ecosystem statistical surveying report studies the presence of the top to bottom market segments. The market is surveyed based on revenue (USD Million) and presents the significant players and providers affecting the market. Most of the Mobile Phone Insurance Ecosystem data, together with anticipated insights, is introduced in the report with the assistance of tables and figures and Mobile Phone Insurance Ecosystem introduction procedure causes the client to comprehend the market situation.
Mobile Phone Insurance Ecosystem Market Regional Analysis Includes:
Americas, United States, Canada, Mexico, Brazil, APAC, China, Japan, Korea, Southeast Asia, India, Australia, Europe, Germany, France, UK, Italy, Russia, Spain, Middle East & Africa, Egypt, South Africa, Israel, Turkey, GCC Countries
The Mobile Phone Insurance Ecosystem report additionally forecasts global market growth, alongside characterization dependent on geographical conditions. The regions are delegated with information which is outfitted in the release of the global Mobile Phone Insurance Ecosystem market growth is consistently assembled from reliable industries for anticipating the advancement of each section.
Major Points Covered in Table of Contents:-
Scope of the Report
Global Mobile Phone Insurance Ecosystem Market by Players
Mobile Phone Insurance Ecosystem Industry by Regions
Middle East and Africa
Market Drivers, Challenges and Trends
Marketing, Distributors and Customer
Global Mobile Phone Insurance Ecosystem Market Forecast
A new campaign called “Driving Choice,” has been launched to provide British Columbians with a voice to demand more choice in auto insurance. The campaign provides the facts about how auto insurance works in other provinces and looks to dispel the myths being spread by those seeking to maintain the status quo with the Insurance Corporation of British Columbia (ICBC).
Under ICBC’s monopoly, BC drivers pay the highest auto insurance rates in Canada, yet receive the same amount in benefits when they make a claim. At the same time, ICBC has lost more than $3 billion in the last three years alone, depriving the provincial government of funding that could be better invested in healthcare, education, and social services.
That’s why Driving Choice is giving a voice to British Columbians, so that they can let their Member of the Legislative Assembly (MLA) know that they want change and that they want choice in auto insurance.
A better future is possible, one where insurers compete on a level playing field so that drivers can choose the company that delivers the best coverage at the best price. It’s a choice most other Canadians enjoy, and British Columbians deserve.
“Driving Choice gives a voice to the overwhelming majority of British Columbians who want more choice in auto insurance,” said Aaron Sutherland, Vice-President, Pacific, IBC. “Under ICBC’s monopoly, British Columbians pay more for auto insurance than anyone else in Canada, and are denied the benefits of choice and competition. It’s time to let drivers shop around, find savings, and choose the auto insurer that’s right for them.”
About Driving Choice Insurance Bureau of Canada is supporting Driving Choice because auto insurers are eager to compete dollar-for-dollar with ICBC. They believe they can sell the same auto insurance for less and save drivers money. Why not let them? Change will only occur if drivers – and taxpayers – make their voices heard. Speak up and demand choice from your MLAs.
About Insurance Bureau of Canada Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up 90% of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.
P&C insurance touches the lives of nearly every Canadian and plays a critical role in keeping businesses safe and the Canadian economy strong. It employs more than 128,000 Canadians, contributes $9.4 billion in taxes and has a total premium base of $59.6 billion.
For media releases and more information, visit IBC’s Media Centre at www.ibc.ca. Follow IBC on Twitter @IBC_West and like us on Facebook. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC (1-844-227-5422).
If you require more information, IBC spokespeople are available to discuss the details in this media release. To schedule an interview, please contact:
SOURCE Insurance Bureau of Canada
For further information: Vanessa Barrasa, Manager, Media Relations, 416-362-2031 ext. 4312, firstname.lastname@example.org
Mergers and acquisitions (“M&A“) can be a double-edged sword. When done right, M&A can allow acquirers to scale their businesses and create value through synergies. When done poorly, M&A can result in drastic overpayments for assets that are not nearly as valuable as believed and for economies of scale that are very difficult to achieve.
One of the main risks in M&A is information asymmetry: simply put, the vendor knows much more about its business than the acquirer. While the acquirer is able to perform due diligence, time pressures to close the deal mean that this process can sometimes be imperfect; issues are sometimes missed. This is where Representations and Warranties (R&W) insurance can come into play. This brief article provides a brief overview of R&W insurance, and discusses some of the issues we have encountered as forensic accountants and business valuators in quantifying losses under this type of insurance coverage.
What is R&W Insurance?
R&W insurance provides indemnity for “losses” related to overpayment by the acquirer resulting from breaches of representations and warranties as set out in the purchase agreement for the acquisition.
These types of policies are becoming increasingly popular. One global broker recently reported a 30% increase in deals written in 2018 compared with the prior year. The average policy limit was equal to 15% of the total enterprise value of the deal (e.g. a deal for $100M would have a policy limit of $15M); while deductibles were generally set at 1% of enterprise value. The same publication also reported that premiums have been declining over the past two years, as more insurers enter this market. Another publication by a leading insurer in the space mentions that the frequency of claims has been roughly one claim for every five transactions.
Two types of mistakes
Based on our experience quantifying losses under R&W coverage, there are two main types of misrepresentations: one-time misrepresentations and long-term misrepresentations.
These types of misrepresentations generally relate to the balance sheet. M&A transactions typically will set a target level of “net working capital”, based on an overall understanding of the subject company. If issues with this calculation are discovered following the closing, the economic loss to the purchaser is generally equal to the amount of the misstatement.
Quantifying these types of issues involves first obtaining a detailed understanding of the components of the purchase price and ensuring that the alleged misrepresentations are not already factored into the price. For example, if the claim is that a large amount of inventory had to be written off following closing, one would need to make sure that the inventory balance included in the closing statements did not already consider a provision for obsolete inventory.
Long-term misrepresentations will tend to involve the income statement. For instance, in one case we were recently involved in, the seller had represented to the purchaser that it was not subject to a particular type of property tax. This turned out to be incorrect, and as a result the purchaser was liable to pay this additional, unexpected amount every year for the foreseeable future. In that case, the loss to the purchaser is equal to the present value of the ongoing annual tax liabilities.
How does one value these sorts of long-term misrepresentations? One shorthand approach might be to simply apply the acquisition multiplier to the value of the annual misstatement. For instance, if the deal multiplier was 10 times the seller’s trailing EBITDA, and the value of a misrepresentation (such as the unreported property tax issue) is $1M per year, then one might reasonably conclude that the value of the misstatement is $10M.
This approach can be appropriate in some cases, but sometimes it can lead to incorrect results, when the cash flows associated with the misrepresentation in question have different characteristics (term, riskiness or growth forecast) than the acquired business as a whole. Consider the following example:
The business being sold has two divisions, Rapid Robotics and Flat Pancakes. After-tax cash flows last year were $10M ($5M for each division), and the business recently sold for $200M, or 20 times after-tax cash flows.
It was discovered that due to regulatory changes in the pancake market (which were known to the seller prior to the deal), Flat Pancakes will need to eliminate a particular product line that accounted for $1M in after-tax cash flows. The purchaser advances a claim for $20M, equal to the annual value of the misrepresentation of $1M times the acquisition multiplier of 20 times.
The problem with this approach is the 20x multiplier may actually consist of a multiple of 30 times cash flows for the Rapid Robotics division, and only 10 times cash flows for the Flat Pancakes division. The higher multiplier for Rapid Robotics would represent the value attributed by the purchaser to the anticipated growth in that division.
This means that the value of the $1M misrepresentation in the slow-growth Flat Pancakes division is only $10M, not $20M.
In order to perform a proper analysis of these longer-term misrepresentations, it is therefore generally very beneficial to obtain a copy of the valuation model used by the acquirer in the transaction in order to understand how the transaction multiplier was arrived at and to reverse engineer the impact of the particular misrepresentation on business value.
This article has only scratched the surface of the types of issues that, in our experience, can arise from post-acquisition M&A disputes. As M&A insurance becomes, in the words of one insurer, “the new normal”, we will no doubt have the opportunity to revisit this topic in future articles.
Dentons is the world’s first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world’s largest law firm, Dentons’ global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.
SSQ Insurance proudly welcomed the news of their CEO Jean-François Chalifoux’s designation as the 2018 Financial Personality of the Year. Chalifoux was honoured by an independent jury of industry peers as part of the annual Top 25 financial industry ranking by Finance et Investissement.
“I’m very pleased to be receiving this award, which I wish to share with my SSQ Insurance colleagues. I’m happy to be able to count on the 2,000 employees dedicated to our organization. Their commitment and involvement in the company’s projects has allowed SSQ Insurance to continue to grow and position itself well in the industry,” said Chalifoux. “I thank them for their hard work and dedication.”
Jean-François Chalifoux is a leader with a vision who has focused the company’s efforts on performance and innovation to maximise the company’s results. The members of the jury acknowledged his strategic audacity and sense of innovation in addition to the company’s growth.
Chalifoux joined SSQ Insurance as CEO in September 2015. Since then he has orchestrated the company’s transformation. Following the implementation of a new organizational model, the merger of the company’s legal entities and the introduction of an ambitious strategic plan, the company launched its new brand identity in 2018 as the crowning achievement of the changes for the company’s members, customers and partners.
About Top25ranking of Quebec’s financial sector Each February, the French-language publication Finance et Investissement hands out its Top 25 ranking of Quebec’sfinancial industry personalities, including the Financial Personality of the Year. This honour is an acknowledgment of the influence, exceptional achievements and remarkable growth of the company under their management.
The Top 25 of the financial industry as determined by Finance et Investissement pays tribute to 25 standout leaders who live and work in the province of Quebec and whose accomplishments stood out in the last year. The award winners are chosen by a jury made up of outstanding members of the financial industry.
About SSQInsurance Founded in 1944, SSQ Insurance is a mutualist company that puts community at the heart of insurance. With $12 billion in assets under management, SSQ Insurance is one of the largest companies in the industry. Working for a community of over three million customers, SSQ Insurance employs 2,000 people. Leader in group insurance, the company also sets itself apart through its expertise in individual life and health insurance, general insurance and the investment sector. For more information, please visit ssq.ca.