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Presentation to RIMS Chapter May 14 th , 2013

Presentation to RIMS Chapter May 14 th , 2013. Mergers & Acquisitions A Risk Manager’s Prospective Presented by Shevaun Macari Director – Insurance Risk Management ABB Inc. North America. Overview – M&A Trends M&A activity peaked in 2007 Downward spiral in 2008 and 2009

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Presentation to RIMS Chapter May 14 th , 2013

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  1. Presentation to RIMS ChapterMay 14th, 2013 Mergers & Acquisitions A Risk Manager’s Prospective Presented by Shevaun Macari Director – Insurance Risk Management ABB Inc. North America

  2. Overview – M&A Trends • M&A activity peaked in 2007 • Downward spiral in 2008 and 2009 • Slight uptick in 2011 • Slight dip in 2012 – media tells us “buyers are getting choosy”

  3. As a Risk Manager – Where do you begin? The “Basics”

  4. Does your company have an M&A Team? • Introduce insurance risk management function to M&A Team. • Does your company have a written M&A policy handbook or set of guidelines? • Connect with other functions, i.e. real estate, tax, legal, safety…

  5. Electronic Data Rooms – not all are the same; is there a roadmap? • Can you do it on your own or do you need help? Role of consultants, brokers, lawyers (with respect to insurance) • Stay “at the table” to explain everything from EMRs to environmental coverage

  6. Cost of Risk Analysis ….can the TARGET show five years of COR on one bar chart? • Enterprise Risk Management – does TARGET have process? Heat map? • SOX Compliance – are there imbedded into any of the TARGET’s SOX controls insurance related issues? If so , what are they?

  7. The Checklist – we all have our own … but have you cross checked yours against anyone else’s? • How are your findings being presented to management? Can you present?

  8. What kind of deal is this? • Different deals … different concerns by a risk manager … • Example – in a stock deal where you are buying assets and liabilities – you need to know about previous insurance – where are those policies? • Archeology resources

  9. A few words about divestments • Surety bonds – get them replaced by Buyer’s surety AT CLOSING! • Ability to charge back deductibles/ retros/ captive insurance costs – Make sure there is very specific language in transaction document allowing for this! • Know your colleagues (make friends, not enemies….)

  10. A few words about taking a minority ownership position in a company • Due diligence still needs to be completed • Will they have their own insurance? Make sure it is primary to yours • Analyze coverage under your insurance program in connection with your liabilities and theirs

  11. A few words about acquiring JVs • Due diligence still needs to be completed • Will they have their own insurance? Make sure it is primary to yours • Analyze coverage under your insurance program in connection with your liabilities and theirs

  12. What keeps risk managers awake in connection with M&A work?

  13. What haven’t they told me? • Think … how did I phrase the request? How did they respond? Not that people are hiding things but …. • Can you explain (again) how you are accruing for workers’ comp? • FDA Warning Labels/Issues? • Any product recalls? • Cybertech …. EPLI

  14. Ok … the deal’s done …. Integration Challenges:

  15. Integration begins prior to close • Culture of both organizations – how to blend together? • Who’s in charge? • Can we take action at closing? Or at what point? • Do I have a cooperative speaking partner? Do they have a risk manager?

  16. Can you do it on your own or do you need help? • On to the next check list … integration activities …. Stay on it … • Combining insurance programs is not about saving money…raising limits, broader coverage and more consistent approach to risk control in all areas

  17. A few thoughts about certificates • How many certificates of insurance do you need immediately? • Can we see what form(s) they used? Same limits on each cert? • Who requests them going forward? Contract reviews? Lease reviews?

  18. A few thoughts about surety bonds • Who requests them going forward? • Compliance with approval process? • Any issues with ‘your’ surety vs. ‘theirs’?

  19. Questions?

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