Transaction liability insurers see opportunity in secondaries as the impact of Trump’s tariffs on M&A slows.

Transaction liability underwriters are primed to see an uptick in business as the activity in the secondaries market picks up pace while M&A transactions slow down. The insurance industry is anticipating an increase in demand for transaction liability policies, with experts suggesting that the current market conditions are favorable for underwriters specializing in this area.

In recent months, the M&A market has experienced a slowdown due to various factors, including economic uncertainty and the impact of the global pandemic. As a result, many companies are choosing to delay or put a hold on their acquisition plans, leading to a decline in M&A activity. On the other hand, the secondaries market, which involves the buying and selling of existing private equity fund stakes, has seen increased interest and deal volume.

Transaction liability insurance, also known as representations and warranties (R&W) insurance, plays a crucial role in M&A transactions by providing protection against losses arising from breaches of seller representations and warranties. As M&A deals become more complex, buyers are increasingly turning to insurance to mitigate risks and facilitate smoother transactions. This shift towards utilizing transaction liability insurance has been a driving force behind the growth of this specialized insurance sector.

With the surge in secondaries market activity, transaction liability underwriters are expected to see a surge in demand for their services. The unique characteristics of secondaries transactions, such as the absence of seller warranties, make insurance an attractive option for buyers looking to protect their investments. As a result, underwriters specializing in transaction liability insurance are well-positioned to capitalize on the opportunities presented by the evolving M&A landscape.

Experts in the insurance industry have noted that transaction liability underwriters are likely to benefit from the increased demand for their products and services. The current market conditions, characterized by a slowdown in M&A activity and a surge in secondaries market transactions, create a conducive environment for underwriters to expand their business and establish themselves as key players in the insurance market.

In conclusion, transaction liability underwriters are poised to reap the rewards of a shifting M&A landscape. As companies navigate the challenges and uncertainties brought about by the global pandemic, transaction liability insurance is becoming an essential tool for mitigating risks and ensuring the success of complex transactions. With the rise in secondaries market activity and a slowdown in traditional M&A deals, underwriters specializing in transaction liability insurance are well-positioned to thrive in the evolving business environment.