Aon | Financial Services Group
SPACs
In recent years, Special Purpose Acquisition Companies (SPACs) have emerged as an alternative approach for raising capital. Aon is uniquely positioned to support sponsors and operators throughout the SPAC risk management lifecycle.
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Directors & Officers
April 2023 - In a ruling that may impact the Directors & Officers insurance (D&O) market, a court found coverage available for a company’s D&Os under policies issued to a special purpose acquisition (SPAC) company.
11 Restructuring
March 2023 - 2022’s steady drumbeat of challenging macroeconomic and geopolitical developments have increased attention on a potential up-tick of corporate bankruptcy filings.
Potential Developments in 2023
March 2023 - There was an explosion of SPAC and deSPAC transaction activity between 2019 and 2021. Deal sponsors raised capital through SPAC entities, used that capital to acquire attractive target companies and then took those companies public in a deSPAC transaction. This is not the disclosure-int...
Similar Allegations Follow?
March 2023 - On January 4, 2023, the Delaware Court of Chancery denied a Special Purpose Acquisition (SPAC) defendants’ dismissal motion, raising questions about whether similar allegations could be raised against other SPACs.
SPACs face an everchanging risk landscape. Transactions are complex, time-critical and highly specialized. SPAC leaders need trusted advisers who understand their goals and challenges and bring actionable knowledge to the table.
Key Considerations for SPAC D&O Programs
Insurer Selection
SPAC D&O coverage is highly specialized. SPACs typically require a multi-year policy (which aligns with expected lifespan) and exposures vary widely by industry.
Moreover, SPACs domiciled outside the U.S. often require placement in a foreign market to comply with tax, regulatory and insurance laws.
Coverage
Inherent to SPACs is an uncertainty with respect to, among other things, the target’s size, profile and industry. That uncertainty drives the need for SPAC D&O insurers to provide a significant amount of flexibility and creativity to meet insured and broker requirements with respect to coverage solutions. Examples of key insurance features include pre-agreed run-off rates (in the event of a failed transaction search process) and options to waive the “change in control” provision in certain scenarios.
Comprehensive Assessment and Comparative Analytics
Up-front premium costs are some of the most easily quantified expenses in SPAC placements. However, the total cost of risk for SPACs must be measured throughout the life-cycle and contemplate run-off, timing, and other related premium outlays. Importantly, limits adequacy is a key question – and one that our proprietary SPAC benchmarking data can validate to help achieve optimal purchasing decisions. Using its breadth of experience in this sector, our team stand ready to provide both an insurance assessment of the S-1 and targeted advice with respect to markets, program design and process.
Links to more SPAC-related information
All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.