Our outlook on the industry

Euclid Transactional R&W/W&I Insurance February 2024 Update

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Managing Principal Jay Rittberg highlighted trends in the representation and warranty/warranty and indemnity insurance (RWI) market through January 2024. Read more in Jay’s recent blog (linked here) or view the full text below.

Euclid Transactional R&W/W&I Insurance February 2024 Update

On this rare Leap Day, we consider whether M&A and the representation and warranty/warranty and indemnity insurance (RWI) market is on its way to a Quantum Leap ahead in 2024.

Euclid Transactional bound 69 RWI policies globally in January 2024, the most for any January in our nearly 8-year history! This is 3% above our prior record in January 2023.  January RWI policy submissions and deal sizes were also up compared to January 2023 levels, including a significant 53% jump in average enterprise value to $342 million.  These numbers seem in line with continuing expectations that inflation will remain steady or drop in 2024 and perhaps financing for larger deals is starting to become more available.

Consistent with the increase in policy bindings, submission volume and transaction values, we saw an increase in primary RWI policy rates in January.  Still, despite the transactional insurance industry having now paid billions of dollars of claims (Euclid Transactional has paid over $700 million in claims, including $225 million of claims in 2023 alone), rates remain near the lowest level in our history.  Euclid Transactional predicts a rise in rates in 2024 based on expected increased M&A activity and the importance of rate in supporting claims payments across the industry, including given some of the trends identified in our claims study released in Q4 https://www.linkedin.com/feed/update/urn:li:activity:7136008571703496705. It will continue to require significant underwriting and claims-handling resources to properly support the high level of service that we hope to deliver to our partners in the M&A ecosystem.

How was your start to 2024? Do you think this will be a Quantum Leap Year ahead for M&A and the RWI insurance market? Do our numbers align with your experiences in January?  Feel free reach out to Euclid Transactional to discuss these or any other topics.

Euclid Transactional Global RWI/WI Insurance January 2019 – January 2024

Euclid Transactional Global RWI/WI Monthly Submissions, Bound and Average Transaction Values March 2020 – January 2024