Presentation to MAPI Conference February 28th & March 1st , 2013

Mergers & AcquisitionsA Risk Managers ProspectivePresented by Shevaun MacariDirector Insurance Risk ManagementABB Inc. North AmericaPresentation to RIMS ChapterMay 14th , 2013

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

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As a Risk Manager Where do you begin? The Basics3

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

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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

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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 TARGETs SOX controls insurance related issues? If so , what are they?

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The Checklist we all have our own but have you cross checked yours against anyone elses?

How are your findings being presented to management? Can you present?

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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

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A few words about divestments

Surety bonds get them replaced by Buyers 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.)

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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

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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

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

What havent 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

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Ok the deals done . Integration Challenges:14

Integration begins prior to close

Culture of both organizations how to blend together?

Whos 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?

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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 moneyraising limits, broader coverage and more consistent approach to risk control in all areas

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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?17

A few thoughts about surety bonds

Who requests them going forward?

Compliance with approval process?

Any issues with your surety vs. theirs?

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Questions? 19