Acquiring a Life Insurer — Things You Need to Know Now
September 11, 2019 by Reid Feldman, Daniel Rabinowitz, Kramer Levin Naftalis & Frankel LLP
With M&A activity for life insurers or blocks of in-force business poised for a possible spike, acquirers of life businesses should consider factors that are peculiar to, or disproportionately affect, the life and annuity sector relative to other types of insurers such as property-casualty (p&c).
Such features specific to life companies include the following, which require a dedicated focus on due diligence and may also require appropriate tailoring of representations and warranties or other provisions in the purchase contract:
- A life insurer’s competitive space differs from that of a p&c counterpart. While a p&c carrier is largely competing against other insurers, a life insurer is potentially competing against not only peer insurers but also providers of investment products such as banks, broker-dealers, investment managers, financial advisers, mutual funds and private funds.
- Life insurance products are by their nature more tax-sensitive than p&c products, requiring special focus on tax compliance of the carrier’s products.