Financial insurance consulting assures due diligence and strategic planningArticle added by Andrew Barile on January 8, 2009
Andrew Barile

Andrew Barile


Joined: August 21, 2010

Market dislocation in the insurance industry as a consequence of AIG and XL Capital has created enormous new opportunities for your agency and private equity firms. So, as a matter of immediate reaction, your agency should retain the services of an insurance investment banking organization that has provided financial and management consulting services to insurance companies, retail and wholesale brokers, banks, and others engaged in the insurance industry.

A very experienced insurance investment banking firm can provide services that address mergers and acquisitions, valuation and fairness opinions, litigation support, assistance in managing troubled situations and strategic and business planning. In addition, they can raise capital for business growth, acquisitions and restructuring to take advantage of these currently profitable opportunities.

Make sure your selected financial consulting firm has had experience and success in negotiating with sources of capital such as private equity firms, hedge funds and even reinsurance companies. To assure proper planning, ask the financial consultant if they have experience with the following:
  • Formulating business plans and incorporating offshore reinsurance company owned by senior executive of the managing general insurance agency

  • Critiquing business plan for start-up domestic insurance company and a single insurance product

  • Strategic planning to improve financial rating of the insurance company, domestic or offshore, (i.e., understanding the importance of financial ratings of insurance company rating organizations such as A.M. Best, Moody's, Standard and Poor's and Fitch

  • Negotiating and capitalizing a risk retention group to provide unique insurance coverages

  • Providing a strategic insurance carrier search for managing general agency or market finder

  • Critiquing business plan for start-up retailer, E&S broker, wholesaler, managing general agency and offshore reinsurance brokerage firm, as well as capitalization and return on equity

  • Selecting an insurance litigation law firm, disputes of policyholders, agents and brokers

  • Negotiating for an insurance company of asset management corporation, and formulating investment income strategies and fixed income investment strategies

  • Selecting a reinsurance arbitrator, collecting reinsurance recoveries

  • Negotiating the compensation structure of a third-party administrator, wholesale broker and reinsurance broker
Too many insurance investment banking firms are only transaction-oriented, focusing only on their fees and compensation. Lacking practical insurance industry experience, they make unrealistic assumptions only to leave the proposed acquisition in chaos. Do not be a victim. Demand an experienced financial consultant.

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