Corporate Advice to Insurers

Strategic reorganization

Regulatory requirements on the capitalization of insurers continue to occupy the sector. In a series of transactions, further companies have handed over their life insurance portfolios to private equity investors. Arag, for instance, transferred portfolios to one of the three most active run-off specialists, Frankfurter Leben. The insurer had already snapped up Basler Leben for itself. The Chinese venture capital company Fosun (among others) is behind the platform.

Its competitor Viridium (formerly Heidelberger Leben), which belongs to the private equity company Cinven, secured itself the portfolio of the former Mannheimer Leben, which has long since resided at Protektor. The third investor is the Apollo subsidiary Athene, which had bought the German Delta Lloyd business.

The strategic reconfiguration of the insurance business also includes efforts to cover new and ever more international risks, such as those related to cyber attacks or autonomous driving. Digitalization and insurtech initiatives also arise in the context of potential saving opportunities in sales and claims management. And the search continues as strongly as ever for investments with sufficient rates of return. After all, in the current market situation raising policy prices is hardly possible, as new providers are making tremendous investments in classic risks such as managerial liability or major litigation, generating strong competition for the established insurers.

Against this background, the possibilities of refinancing and reinsurance play an important role. But precisely for this reason, the obstacles created by Solvency II for reinsurers from non-EU countries have made waves. By the end of 2016, inroads had been made towards a bilateral solution, at least with the US.

Allen & Overy very visible at the side of Frankfurter Leben

The engagement of run-off platforms has consolidated the positions of three firms in particular. The respected team of Allen & Overy was recently very visible in its work for client Frankfurter Leben. The same applies to Freshfields Bruckhaus Deringer and its connection to Viridium, as well as to Linklaters and Athene. While there are those on the market who believe that in recent times somewhat less has been heard about Hengeler Mueller, the latter practice recently showed signs of life at the side of Protektor.

But even if relationships in the insurance industry are notoriously long-lived, cost considerations are breaking through here, too. “We have concluded that we do not need the expense of a major international law firm for every external instruction,” said the chief legal advisor of an insurer, for instance. Other firms may thus find a more level playing field in the future.

 

The firms discussed in this subchapter have built up experience in the insurance sector. They advise insurers on corporate restructuring, run-offs, M&A transactions, and crisis situations. The specific requirements of the insurance regulatory authorities play a role. The individual specialties of these firms are also discussed, with references to other chapters where applicable.