White Paper

As SPACs Advance, So Does the D&O Underwriting Market

Interest is growing in special purpose acquisition companies, or SPACs. But these unique entities require a thoughtful and comprehensive approach to D&O coverage.

White Paper Summary

An investment trend that is gaining in popularity presents a substantial business opportunity for commercial insurers, specifically D&O underwriters, provided they can navigate a somewhat complex underwriting and claims process; that is, should significant claims develop.

What are known as special purpose acquisition companies, or SPACs, have existed for decades but became an increasing focus for investors in the latter half of 2020. Simply stated, the investment opportunity allows a management team, backed by investors, to form a vehicle, the SPAC, that acquires a private company, merges with it, and creates a new public entity.

Some consider this a more controlled and potentially profitable way to bring a private company public, as opposed to a standard IPO, provided the SPAC’s management team is talented enough to correctly gauge a market opportunity and execute on it. According to guidance from the Securities and Exchange Commission issued on May 25, 2021, the vehicle also can give investors more control over deal terms.

To learn more about AXA XL, please visit their website.

AXA XL, the property & casualty and specialty risk division of AXA, provides insurance and risk management products and services for mid-sized companies through to large multinationals, and reinsurance solutions to insurance companies globally. We partner with those who move the world forward. To learn more, visit www.axaxl.com.

More from Risk & Insurance

More from Risk & Insurance