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Welcome to Advisen’s

Transaction Insurance

Insights Forum!

Welcoming Remarks

David Bradford

Co-Founder & Chief Strategy Officer

Advisen

Thank you to our Advisory Board

Jeffrey Anderson, Allied World

Jeffrey Cowhey, Ambridge Partners LLC

Mary Duffy, AIG

Matthew Heinz, Aon

Peter Rosen, Latham & Watkins [2016 Conference Chair]

Mark Rusas, Willis Towers Watson

Thank you to our

Host Sponsor

Thank you to our Sponsors!

Opening Remarks

Peter Rosen

Partner

Latham & Watkins

[2016 Conference Chair]

Marketplace

Metrics

Marketplace Metrics

Peter Rosen

Partner

Latham & Watkins

(Moderator)

Marketplace Metrics • Peter Rosen, Partner, Latham & Watkins (Moderator)

• Jeffrey Anderson, North American Mergers &

Acquisitions Group Lead, Allied World

• Matthew Heinz, Managing Director, National Practice

Leader – Transactional Liability, Aon

• Edward Markovich, SVP, Transactional Risk, Chubb

• Craig Schioppo, Transactional Risk Practice Leader,

Managing Director, FINPRO, Marsh

Marketplace Metrics

The Buyer’s

Perspective

The Buyer’s Perspective

Bill Monat

EVP – Mergers & Acquisitions Group

Willis Towers Watson

(Moderator)

The Buyer’s Perspective • Bill Monat, EVP – Mergers & Acquisitions Group, Willis

Towers Watson (Moderator)

• Joshua Aronson, Senior Vice President & Deputy General

Counsel, Audax Group

• John Giouroukakis, Partner, Latham & Watkins

• Thomas Kim, Global Risk Manager, KKR

• John Merrigan, Managing Director, US Insurance Risk

Management Solutions Lead, PricewaterhouseCoopers LLP

The Buyer’s Perspective

Coming up next…

“International Issues”

Morning Break

Thank you to our

Host Sponsor

Thank you to our Sponsors!

International Issues

International Issues

John McNally

Transaction Advisory Practice

JLT Specialty USA

(Moderator)

International Issues • John McNally, Transaction Advisory Practice, JLT

Specialty USA (Moderator)

• Peter de Boisblanc, Associate, Ropes & Gray LLP

• Angus Marshall, UK M&A Manager, AIG

• Tan Pawar, Senior Vice President of Mergers &

Acquisitions, Paragon Brokers

• Craig Warnke, Managing Director, Marsh

International Issues

Beyond Reps &

Warranties

Beyond Reps & Warranties

Michael Schoenbach

Managing Director

Aon

(Moderator)

• Michael Schoenbach, Managing Director, Aon (Moderator)

• David De Berry, CEO, Concord Specialty Risk

• Seth Gillston, Executive Vice President, M&A and Private

Equity Practice Leader, Chubb

• Roy Reynolds, Divisional Senior Vice President,

Great American Insurance Group

• Brian Thede, President, Healthcare Risk Assessments

Beyond Reps & Warranties

Beyond Reps & Warranties

Coming up next…

“The Claims Process”

Conference Luncheon

Thank you to our

Host Sponsor

Thank you to our Sponsors!

The Claims Process

The Claims Process

Nancy Adams

Member

Mintz Levin

(Moderator)

• Nancy Adams, Member, Mintz Levin (Moderator)

• Markus Bolsinger, Partner, Dechert LLP

• Mary McIvor, Global Head of Financial Institutions

Claims, AIG

• Diane M. Parker, Vice President, North American

Claims Group, Allied World

• Dan Torpey, Partner, Fraud Investigative & Dispute

Services, EY

The Claims Process

32

Claims Study …

•Who is Making the Claims?

– First Party vs. Third Party

•What are the Claims?

– Financial Statements, Tax, Accounting, Contracts,

•Where are the Claims?

– US vs. Global

•When are Claims Being Made?

•Why are Claims Being Made?

– Indemnities, Retentions, Escrows

33

Investigations of Claims – Part One

The Initial Claim Review:

– Policy, acquisition agreement, underwriting file

– Claim documents

– Other insurance

– Meeting/interview with insured & representatives

– Determining what documents exist

34

Investigations of Claims – Part Two

Complexity of investigation depends on:

– First-party or third-party claim

– Insured buyer or insured seller

– Type of misrepresentation (e.g., accounting issue v. working condition of tractor)

35

Coverage For Claims:

Key issues to be investigated:

– Whether there was a breach of a R&W

– Whether the loss was a proximate result of the breach

– How to quantify the amount of the loss

– Are there any applicable exclusions?

– Deductibles, Retentions and Indemnities

36

The First Question … Was There a Breach?

•Reps that are frequently at issue

•Disclosure schedules

•Analysis of Breach: a/k/a Not Every Post-Closing Surprise is a

R&W Breach

37

What Should You Expect … It Depends:

•Financial misrepresentations:

– Forensic Accountants and Other Experts

– Documents to be reviewed

– Analysis, Time Frame, Common Issues

•Other first-party claims

•Third-party claims

38

Case Study – Post Acquisition Dispute

•Buyer had an acquisition insurance policy excluding NWC

true-up

•Buyer identified higher liabilities after acquisition

•Buyer took seller to arbitration and received a settlement for

higher liabilities above NWC true-up

•Buyer then tried to utilize their insurance policy by turning the

higher liabilities into an expense issue

– This moved the issue from the balance sheet as NWC to income

– Buyer claimed the value of the company was lower due to lower income

39

Coverage Dispute: Arbitration or Litigation?

–Pros and Cons

– Interplay with Purchase Agreements

–Settlements

40

Subrogation?

– Interplay with Purchase Agreement

– Can we Say "Fraud or Bad Accounting"

– Trends in Anti-Fraud Due Diligence

– Who Brings the Claim

41

EY – 2016 Fraud Survey - Justifying unethical

behavior and misconduct

► Our survey found that some

executives continue to justify

unethical acts to improve a

company’s performance.

► When presented with a series

of options, more than one-third

would be willing to justify

inappropriate conduct in an

economic downturn, while

almost half would justify such

conduct to meet financial targets.

► While the behaviors that these

respondents can rationalize

differ between regions, they

should be deeply concerning

to all companies.

42

The Fraud Triangle

Internal Controls

Internal and External Pressure

Opportunity to Commit Fraud

Periodic reporting requirements to

external stakeholders

Organization may be trying to do more

with marginal increase in resources

Effects of decentralization on

internal controls

Overworked and newly acquired employees may

have greater ability to rationalize

improper actions

Pressure

Opportunity

Rationalization

Multiple acquisitions with unique data and

financial systems

Changes in workforce roles &

responsibilities may impact internal

control oversight

Increased pressure associated with

financial leverage

The Claims Process

Coming up next…

“Growing Pains”

Afternoon Break

Thank you to our

Host Sponsor

Thank you to our Sponsors!

Growing Pains

Growing Pains

David Bradford

Co-Founder & Chief Strategy Officer

Advisen

(Moderator)

• David Bradford, Co-Founder & Chief Strategy Officer, Advisen

(Moderator)

• Jeffrey Cowhey, Co-Founder & President, Ambridge Partners

LLC

• Matthew Somma, Underwriting Specialist, Transactional Risk,

The Hartford

• Howard T. Spilko, Partner, Kramer Levin Naftalis & Frankel LLP

• R. Philip Stevenson, Senior Vice President, VALE Insurance

Partners

Growing Pains

Growing Pains

The Broker’s

Perspective

The Broker’s Perspective

Dennis Kearns

SVP, Transactional Liability and

Financial Institutions

QBE North America

(Moderator)

• Dennis Kearns, SVP, Transactional Liability and Financial

Institutions, QBE North America (Moderator)

• Stacey J. Hammer, Vice President, Privacy Equity and

Corporate Acquisitions Practice, Lockton Companies

• Jeff Rubocki, Senior Managing Director, Krauter & Company

• Mark Rusas, EVP – Global Practice Leader, Mergers &

Acquisitions, Willis Towers Watson

• Kirk Sanderson, Senior Vice President, Transaction Risk

Practice Leader, Equity Risk Partners

The Broker’s Perspective

The Broker’s Perspective

Closing Remarks &

Reception