PIB Private Equity - engaging with investment businesses and their portfolio companies

PIB Insurance Brokers is proud of its extensive connections in the world of private equity. As a highly active member of the Private Equity community completing over fifteen acquisitions a year, the team fully understands the dynamics of deal flow and the need for timely support around each transaction.

We understand the importance of successful transactions and the role that insurance plays in supporting them. That's why we offer a range of transactional insurance solutions which sit in three areas:

• Protecting the Transaction 

Each deal is unique and we can provide support with pre-transaction insurance due diligence on the target company (this can include diligence on the health of people within those businesses) and protection of the transaction itself (for example W&I, Tax Liability, Litigation Funding, Personal Guarantees)

• Protecting the Investment Portfolios 

Once the deal is done, we can help with all the insurance requirements through collaboration with the wider PIB group, including Property Risks, General Liability, Management Liability, Professional Liability, Cyber Risk, Workplace Pensions, Key Person/Critical illness, Trade Credit and Political Risk

• Protecting the Private Equity Hub (The Manager) 

The Private Equity Manager has some obvious risks to protect against things going wrong including PI, D&O, Cyber and Crime. Investors would expect and indeed insist that PE firm holds PI and D&O as a minimum.

What trends are being seen which are shaping the UK industry in the future?

The move towards net-zero and ESG (Economic, Social and Governance) will shape the investments PE firms make in the future. Investment performance and activity will be sector specific with so many influencing factors in the economic and political environment.

Renewable energy M&A continues to be very active. A drop in the strength of the pound and lower valuations in the UK should continue to appeal to international investment. The lower valuations won’t appeal so much to the sellers which may stall activity.

What are some of the key factors that investors and companies should consider when selecting a private equity insurance policy?

We always insist on the use of insurers of strong financial strength (ability to pay claims) and who have a track record in the provision of insurance for Private Equity Managers or for the particular nature of the business of the Portfolio Investment. We try keep the insurer as consistent as possible across the insurance programme to reduce risk of cover gaps and to leverage on pricing. This is not always possible.

The role of due diligence in private equity insurance

Before a transaction takes place buyers (PE firms or other) will want to know exactly what they are buying. They will undertake financial, legal and insurance due diligence (IDD). The IDD is to identify uninsured risks, areas of duplication, gaps in cover and potential claims issues. As an example a recent IDD exercise identified a total loss PI claim which fundamentally affected the decision not to proceed with the purchase. The potentially significant renewal cost and indeed availability of cover in regulated market where PI cover is compulsory was enough to pull out of the deal.

Supporting Dealmakers Awards across the UK

As a leading risk advisor, PIB is committed to supporting the growth and success of businesses across a range of industries. That's why we're proud to be sponsoring awards at Scottish Business Insider Deals & Dealmakers 2023 in Glasgow on the 24^th August and Insider North West Dealmakers in Manchester on Thursday 12^th October.