Coverage 101 | Finding the best insurance for a private equity firm in Canada
As a private equity firm, your knowledge of inherent value in the Canadian marketplace is what sets you apart. Whether you are first to the table as an angel investor or deep into later rounds of financing, you know that fostering new business opportunities comes hand-in-hand with risks as well as rewards. Private equity firms in Canada understand how important it is to mitigate risk with comprehensive insurance coverage that is designed to anticipate and cover the specific risks their business faces.
Risk can and will happen during any phase of the business cycle. It might happen during start-up equity financing, the buy-out process, while making decisions as a board director or even as part of the liquidity process. As a private equity firm, the risks you face are not only complex but can impact both your firm as well as your leaders.
As experts in the commercial insurance marketplace, we work with Canada’s top insurance companies to bring better coverage solutions and options to our clients. Together with Chubb Insurance Company of Canada, we are proud to offer a bespoke insurance solution that’s specifically designed to meet the needs of Canadian private equity firms.Â
If you want the best insurance for your private equity firm, this article brings together timely and useful insights.
Coverage that matches the needs of Canadian private equity firms
Without risk, there can be no rewards. You know this intuitively and taking a calculated risk is what your private equity firm does in order to help businesses move forward. This means that while you’re chasing a new business acquisition, it’s important know that your key risk exposures as a firm are also well covered. This is where Chubb’s Private Equity+SM solution can help.
Built upon a deep and thorough understanding of both existing and emerging exposures faced by private equity firms in Canada, this market-leading coverage addresses:
- “Portfolio company pre-acquisition defence costs arising from lawsuits brought against the private equity firm as controlling shareholder of a portfolio company, even when the alleged acts of the portfolio company proceed the private equity firms acquisition date.Â
- Crisis costs incurred by the private equity firm in hiring a public relations firm to mitigate the potential reputational damage resulting from the termination of a key executive.
- Defence costs incurred by a private equity firm executive as a result of his or her being interviewed by regulatory enforcement agencies.”1
Complex liability exposures? Get your private equity business risks covered
Focus is what you need to grow and build your business. Knowing that the unique risks your private equity firm faces are suitably covered will give you the focus to keep forging ahead.Â
Chubb’s Private Equity+SM solution brings together four distinct coverages that are specific to the highly unique exposures private equity firms face in a single, efficient policy. These coverages are as follows:
- “Management Liability – Directors and Officers – including: Automatic coverage for entrepreneurs in residence, consultants, advisory board members and shareholder representatives appointed to liquidate portfolio companies.Â
- Outside Directorship Liability including: Drop down primary coverage for a portfolio company’s wrongful refusal to indemnify.Â
- Professional Services Liability – Errors and Omissions – including: Portfolio company selling shareholder securities claim (in a portfolio company IPO) capacity coverage.Â
- Employment Practices Liability including: Defence costs coverage for written employment contracts disputes.”2
Multiple scenarios. One solution for private equity firms in Canada
At every stage of the business cycle, risk exposures add layers of complexity. This is why Chubb’s Private Equity+SM solution also includes coverage for key professional services such as:
- “Customary financial and strategic advice given to develop portfolio companies.
- Portfolio company liquidity events, such as an IPO, a sale, bankruptcy, insolvency, mergers, or acquisitions.
- Portfolio company financings or buyouts or including disputes relating to alleged breaches in such transactions.
- Extending or refusing to extend credit.
- Down round financing and impact of shareholder dilution.
- Portfolio company valuation activities.
- Winding down or liquidating a portfolio company.”3
Regardless of the next industry your firm buys into, you need to know that your insurance coverage is specifically geared to mitigate the risks that a private equity firm faces.
Across Canada, commercial insurance is our sole and driving focus. We’re confident that ALIGNED Insurance brokerage is the ideal choice when you want to get the best insurance for your private equity firm.
We know Canadian business | Get ALIGNED with our commercial insurance experts
Value is at the heart of what any professional insurance broker delivers to their clients. This is why we’re constantly reviewing the insurance products and services available in the Canadian marketplace. And it is why, when we find a solution that is an ideal fit for our clients – today and in the future – we bring it forward to their attention.
The best business brokers are known for delivering much more than just a policy. In fact, this is why the ALIGNED Insurance team across Canada is proud to deliver 18 unique points of differentiation.Â
Our consistent delivery of these 18 points of differentiation is why we’re consistently recognized by our industry as one of the best business insurance brokers in Canada.Â
Specialization matters | The value of a commercial insurance brokerage
Across Canada, our experienced insurance brokers are ready to line up coverage that specifically meets the needs of your private equity firm.
In fact, our team knows that the most important thing we do is actively support Canadian business. Every day, we take pride in aligning the very best commercial insurance products and services to meet the precise needs of each of our clients.Â
From our Toronto corporate head office, to Vancouver to Calgary to our Cambridge national operations centre, we are here to deliver expert commercial insurance advice. You can find an ALIGNED commercial insurance broker online and by picking a location.
Expertise matters | Trust our brokers to get the best insurance for your private equity firm aligned
If you are ready to work with a dedicated commercial insurance broker, it’s time to get aligned.Â
Want to discuss your commercial insurance needs with an ALIGNED insurance broker? You can reach us toll-free at 1-866-287-0448 or via email quotes@alignedinsurance.com
Source(s): 1,2,3 Chubb’s Private Equity+SMBlended Professional, Management and Employment Practices Liability Insurance;  Bain & Company: Global Private Equity Report 2019
