The 2019 M&A Power Brokers

Inna Ashtamenko
Managing Director
Marsh

Inna Ashtamenko, Managing Director, Marsh

Marsh’s Inna Ashtamenko is lauded for being a very nuanced communicator. Whether it’s in a presentation to a board or to a panel of underwriters, she is super sensitive to her audience and the need to help the risk manager put their best foot forward.

“What sets her apart is that she understands what a risk manager needs to be successful and what the broker needs to be for that risk manager to be successful in the eyes of the executives at their company,” said a veteran risk manager with experience in the energy and transportation sectors.

“She is just very good at understanding the right fit for our team and getting people on the account to just hustle,” he added. “She is on top of it and makes all deadlines.”

In the case of an acquisition, Ashtamenko’s client was the target company, and the acquirer used a different broker. Given the opportunity to compete for the business, Ashtamenko prevailed. The benefits to the combined companies were substantial: A premium savings of more than $3.8 million and a savings of an additional $23 million in collateral requirements to the insurer. Ashtamenko’s team effectively combined the programs while eliminating gaps in coverage and improving coverage in key areas.

A client also said Ashtamenko is very good at seeing past the glittering reputations of some brokers and instead finding the broker, even if they are more junior, who is a much better fit for the deal or the program.

“She is hands-down the best,” the risk manager said.

Jessica Harger
Vice President
Aon

Jessica Harger, Vice President, Aon

Clients give Aon’s Jessica Harger credit for being technically adept but clear enough in her communications that she doesn’t confuse things.

“A lot of brokers are guilty of using too much jargon, which often confuses the client, but Jessica cuts through all that and gets to the heart of the matter,” said Thomas Kim, director and global risk manager, KKR Capstone.

One of Harger’s clients was in a real pinch. They were trying to negotiate a purchase agreement, and the seller was unwilling to provide indemnity for two outstanding tax issues spotted by the buyer.

Harger was able to work with the legal and accounting advisors for both the buyer and the seller to craft a tax insurance solution that shielded the buyer from exposure on both tax issues. Harger feels the $600 million in coverage cobbled together with the backing of 13 carriers is one of the largest tax insurance programs ever placed.

Another client, a publicly traded company in the Fortune 500, was pursuing a merger with a unit of a UK-based public company. The newly combined company would be based in the UK, which might raise flags from the IRS on the grounds that it was an abusive inversion transaction.

In just over two weeks, Harger built an insurance program offering protection against any challenge by the IRS on anti-inversion basis.

Rohan Verma
Vice President
Marsh

Rohan Verma, Vice President, Marsh

When two energy companies merged, Marsh’s Rohan Verma was brought in at the very last minute to consolidate their workers’ compensation and auto liability programs. The companies made it very clear they expected to achieve significant synergies.

Making matters complicated, the companies had divergent approaches to risk transfer products. Verma’s team provided a total cost of risk analysis to get at the best structure for the combined company.

The team hit a home run, achieving a 60 percent rate reduction in the workers’ comp program and a 35 percent reduction on the auto liability program — yes, that’s right, the auto liability program. The team was also able to reduce the total outstanding collateral by 14 percent by selling underwriters on the combined company’s excellent financials and backing it up with analytics.

In the case of yet another large international acquisition, Verma was able to quell the fears of a risk manager who was concerned the excess liability limits for the new company might be inadequate. Verma delivered very competitive pricing in a situation where the program increased its limits by 50 percent.

“Rohan assisted with our complex integration of a company that we acquired,” said one risk manager. “In doing so he capably handled the combination of the policies and analysis of alternative structures, helping us find the most efficient way forward and reducing costs in the process,” the risk manager said.

Jonathan Gilbert
Managing Director
Alliant

Jonathan Gilbert, Managing Director, Alliant

As the long-time M&A practice leader at Crystal & Co., Jonathan Gilbert provided risk management advice for more than 2,000 transactions. In April, privately held Crystal announced it was being acquired by Alliant, but Gilbert will remain at Old Slip in Lower Manhattan.

Recently, Gilbert went to bat for an events management company that suffered a series of financial setbacks.

The company was attempting to sell its portfolio company. But there was a concern that related-party debt would be considered equity by the IRS, and therefore, interest, which was deducted from taxable income over an 11-year period, would be reversed for tax purposes. The exposure amounted to $40 million.

The buyer, of course, had no appetite for taking on an enormous tax bill. Numerous insurance brokers told them risk transfer in this case was an impossibility. The buyers then reached out to Gilbert.

After five months of negotiations, he got it done, delivering a risk solution that allowed the seller to get realization on a 10-plus year investment. This turned the deal into a sweet one for the acquirer.

“I think he very clearly understands the philosophical requirements we have from an insurance perspective, and then he is able to approach it pragmatically from a product perspective in the marketplace,” said one CFO.

“He’s got an extensive, wide knowledge, and on the very rare occasion he needs to research, he always does it quickly,” he said.

Lydia Ramcharitar
First Vice President
Alliant

Lydia Ramcharitar, First Vice President, Alliant

In the area of mergers and acquisitions, Alliant’s Lydia Ramcharitar makes her mark as a specialist in employee benefits consulting.

For a client with a poorly constructed benefit plan, she was brought in to complete due diligence on the plan just two weeks before renewal. What she saw was not pretty.

There was a lack of health care coverage for out-of-state employees; the loss ratio was at 125 percent; and there was a pending 20 percent renewal increase. In just two weeks, Ramcharitar was able to revamp the program. She eliminated all exposure, enhanced employee relations and saved the client $150,000 on their health care spend.

In another instance, Ramcharitar helped a client overcome reps and warranties exclusions in its due diligence process. The seller in the deal got an ACA non-compliance letter with an attached penalty of $630,000. Ramcharitar suggested the seller self-report the error, securing removal of the penalty fee prior to the deal closing.

“I could go on and on, I adore her,” said Elizabeth Woodhouse, AVP of human resources and talent, Walden Behavioral Care.

Woodhouse worked with Ramcharitar while at another company and brought the broker with her when she went to Walden. Ramcharitar was able to take a benefits program that was facing double-digit increases and reduce it to single-digit increases.

“She blew it out of the park in terms of knowledge and resourcefulness,” Woodhouse said.

Harry Wallace
Vice President
Marsh

Harry Wallace, Vice President, Marsh

Among his clients, Marsh’s Harry Wallace is known as an innovator in the art of placing insurance to cover tax liabilities and other obstacles that could scotch a deal if left unaddressed.

“Reps and warranty insurance is still a relatively new product, and lawyers and clients are still getting their arms around how it works,” one client said. “

Harry really adds value by rolling up his sleeves and taking the time to walk through hypotheticals and make suggestions. He does a good job of educating his clients on how to get the most value out of the policy.”

Wallace is viewed as an innovator in creating dedicated tax insurance policies that cover an acquirer if the tax liabilities in a merger or acquisition prove to be greater than anticipated.

He is also credited with creating antitrust policies [along with AIG] that cover the dealmakers for their expenses should regulators decide the deal violates federal antitrust laws and force it to be unwound.

Brought in to assist on a large and fast-moving transaction, Wallace and his team were able to craft a multi-policy solution that insured post-transaction liabilities, enabling the deal to close successfully.

In another case, Wallace heard through the grapevine an acquisition in a foreign country was being frustrated over a perceived inability to purchase R&W insurance in that country. Wallace led a conference call with the deal team and transactional liability experts in the target country, which diffused the objections one by one and enabled the deal to proceed.

The complete list of 2019 Power Broker® winners can be found here.

Finalists:

Sarah Allison
Senior Vice President
Marsh

Vermont’s Future Is Golden

Challenging market conditions are driving insureds to captives. Vermont offers a reliable domicile.

Hard markets in commercial insurance lines have been a problem for years now. Many lines don’t show signs of softening, though some, like cyber, have ebbed over the past few years.

High claims volumes and costs have caused carriers to tighten terms and conditions, introduce new exclusions and increase premiums. A variety of different risks are included in this market tightening, and it’s affecting both public and private companies.

As Sandy Bigglestone, deputy commissioner for the State of Vermont’s captive insurance division, explained, schools, churches and other nonprofits are contending carriers are “excluding sexual abuse and molestation from coverage for a lot of these types of entities. These organizations understand the risk and the public needs to have confidence the organizations are addressing the risks, so they must have the coverage.”

Though many commercial lines are affected, property has perhaps been hit the hardest. Increased claims, inaccurate property valuations and other challenges have caused insurers to tighten their books in recent years. 2024’s spate of hurricanes will likely make matters worse.

“There continues to be challenges in the commercial market,” Bigglestone said. “Some companies are coming to us with risks that they say they’ve been self-insuring on their balance sheet, and why not transfer that to a captive to receive greater benefits?”

Consistency and Stability

Sandy Bigglestone, Deputy Commissioner for the State of Vermont’s Captive Insurance Division

With the commercial insurance market so unstable, companies are turning to captives to house their exposures. Vermont, a long-time domicile, is getting increased attention because of their strong reputation and their leadership as the top domicile worldwide.

“All stakeholders enjoy the stable political and regulatory environment Vermont has to offer to operate in,” Bigglestone said.

Of course, a lot of consideration goes into deciding whether or not a captive is the right choice for a particular company. Businesses need to assess their exposures and their books to make sure they can adequately operate a captive.

There are significant advantages, however. “For low frequency, high severity risks, captives can access the reinsurance markets directly, so it’s very attractive for businesses to put a captive in place,” Bigglestone said.

And carriers are more accepting of captives as part of a broader insurance program.

“Captives are changing the relationship businesses have with commercial carriers,” Bigglestone said. “Commercial carriers are wanting to see companies with skin in the game; therefore, the relationships have evolved to be less transactional and more strategic.”

Balancing Bureaucracy

With 76 global domiciles, companies have a lot of options when it comes to selecting a captive partner. “Captive insurance domiciles compete globally for the business,” Bigglestone said. “If you were to put all 7,000-plus captive insurance companies around the world, all in New York, it wouldn’t have the same economic impact as 700 captives in Vermont does. The captive insurance industry is very important to our state and we will continue to support it in any way we can.”

Businesses should look for domiciles that balance a need for quality regulations with a process that isn’t overly bureaucratic and is seamless for business owners to navigate.

“Companies are attracted to an environment with quality regulatory standards and a stable regulatory environment,” Bigglestone said. “Vermont sets the regulatory standard in terms of financial analysis and examinations.”

In addition to quality regulations, firms will want to seek out a domicile that is agile enough to license captive insurance companies that fit their unique needs. It is important that a domicile have firm but fair regulation and the experience to consider new ideas and implement them. Companies must consider a variety of factors when choosing a domicile and not everyone will be the right fit for every company.

“You have to consider the captive owner and the industry sector that that owner operates in, as well as the insurance risks that are going into the captive program,” Bigglestone said. “Captive laws and regulations have to have a reasonable degree of flexibility to accommodate all the varying needs of owners and then impose rules based on the merits of each captive program.”

She added that creativity is a critical part of the process: “The ability to vet concepts and ideas with trusted individuals is key to having quality standards,” Bigglestone said. “And it can make captives appealing to insureds who are tired of commercial carriers not meeting the needs of the business, and who desire more control over their insurance programs.”

“When you think about the commercial marketplace, commercial insurers are supposed to operate in each jurisdiction in a competitive manner. Commercial carriers often look the same. They sell auto coverage to anyone with a driver’s license. The rules and regulations imposed upon commercial insurance companies are designed to be more formulaic for that reason,” Bigglestone said.

“Uniform regulatory standards apply to commercial carriers for the protection of the policyholders. These are standards all insurance regulators focus on, and standards captive insurance regulators need to understand, but with a specialized focus.”

A Quality Domicile Built for the Future

A combination of experience, regulatory standards and talent make Vermont a top domicile for companies looking to form a captive. The longevity of licensing captive insurance companies for over forty years is a testament to the quality work they’ve provided in the past and will continue to provide for many years to come.

Vermont’s reputation has helped the state attract and retain top captive talent, ensuring the businesses it serves are in good hands. The state has 32 employees dedicated to captives, and their average employee retention is 15 years. The Vermont Captive Insurance Association, the largest captive insurance trade organization, also helps companies connect with professional services needed to make their captive successful.

“There’s a whole host of service providers with proven expertise right here in Vermont,” Bigglestone said.

Taken together, Vermont’s resources, expertise and talent make it a prime domicile. They’ve been on a growth trajectory over the last few years and that’s unlikely to change anytime soon. Companies can trust their captive will be in good hands when they choose Vermont.

“Vermont has always competed on quality,” Bigglestone said. “We do have a mission and that hasn’t changed in over 40 years. It’s to maintain a system, or domicile that attracts quality business to Vermont, to promote our reputation in the industry, and to uphold a regulatory framework to protect the solvency of the companies that choose to place their business here.”

To learn more, visit: www.vermontcaptive.com

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with State of Vermont. The editorial staff of Risk & Insurance had no role in its preparation.

The State of Vermont, known as the “Gold Standard” of captive domiciles, is the leading onshore captive insurance domicile, with over 1,200 licensed captive insurance companies, including 48 of the Fortune 100 and 18 of the companies that make up the Dow 30.

The 2019 M&A Power Brokers