Risk in Review 2019: Asia-Pacific

01 August 2019

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After years of steady growth in transaction volume and cross-border dealmaking, the deal environment in Asia-Pacific is maturing and becoming more fully integrated with Western markets. On the back of growth in the broader market, the number of deals utilizing M&A insurance and other types of transaction insurance solutions is increasing dramatically. As uptake of M&A insurance has increased, so has competition among insurance providers, which has benefited clients. Premium pricing is down and insurers are increasingly comfortable providing coverage in previously challenging areas such as technology.

For this report, the second in a four-part series, Aon commissioned Mergermarket to survey M&A legal advisors and private equity and corporate executives in Asia-Pacific to learn about their strategies for managing risk and closing deals in a competitive market.

Key insights include:

  • In 2018, Asian companies became more active in acquiring businesses in Europe and the U.S., and in participating in auctions involving larger companies.
  • The Asian deal market is expected to remain on a growth trajectory, despite concerns about the impact of a U.S. trade war with China and the expectation that the economic cycle may be peaking. Forty-four percent of respondents to the dealmaker survey said they expect the number of Asia-Pacific deals to increase significantly (by more than 5 percent) over the coming year.
  • There were only four insurers covering the Asian market in 2014, of which only two were based in Asia. In 2019, Aon has seen an increase to more than 20 insurers with appetite to underwrite Asian risks and there are currently at least five insurers with underwriters physically based in the region. The W&I product is gaining traction across deals of all sizes.
  • The average deal size in 2018 was $305 million and at least 60 percent of transactions involved targets exceeding $100 million in enterprise value. In 2018, Aon placed W&I insurance policies for transactions ranging from a deal size of $12 million to mega-deals worth up to $2 billion. The average limit placed was $54 million.