The insurance industry continues to face major challenges.
Declining asset values and increased credit risk have placed pressure on capital buffers. Raising or optimising regulatory capital requires industry expertise, such as through securitisations or intra-group reorganisations. Insurance special purpose vehicles (ISPVs) (either a new company or converting an existing company) are a technique which can provide real efficiencies. Buying back Tier 1 and Tier 2 bonds which are trading below par can have the effect of increasing Tier 1 capital.
Management of assets and liabilities to achieve matching and mitigate larger risks is another key area. For example, the need to manage longevity risk is crucial for life insurers which have significant annuity books.
With values low there are opportunities for M&A, whether as a result of insurance companies divesting their non-core assets or others, such as banks, selling their insurance arms. Again financing is the key issue with larger deals probably needing equity financing.
The firm’s insurance lawyers are renowned for devising innovative restructuring and financing techniques for the sector to help our clients achieve their business goals. Our clients rely on Linklaters to guide them through the changes that continue to affect the insurance industry, so they can overcome the issues they face and take advantage of the opportunities. They gain the benefit of expert advice from global specialists in corporate insurance, M&A, litigation, restructuring and insolvency, capital markets, tax, employment and regulatory matters.
Contact us
To discuss legal issues with Linklaters’ global insurance team, please contact sector leaders Duncan Barber, Casper Lawson or Wolfgang Krauel.
Recent insurance transactions include advising:
- China-based insurance company The National Trust on the RMB1 billion agreement to establish a life insurance joint venture company with HSBC in the PRC providing a life insurance platform for HSBC in China
- Legal & General on the conversion of Legal & General Pensions Limited into an ISPV
- Zurich Financial Services Group on its first entry into the Islamic insurance market through a family takaful joint venture
- a major international investment bank on a longevity swap.
- two major international investment banks on the securitisation by Bank of Ireland subsidiary, New Ireland, which involved a number of innovative features
