Transactional Risk Insurance ‘Remained Resilient’ in 2023

Despite a drop in the total number of global mergers and acquisitions, demand for transactional risk insurance “remained resilient” in 2023, Marsh announced in its annual transactional risk report.

Data from the Institute for Mergers, Acquisitions & Alliances showed 39,603 transactions with a total value of approximately $2.5 trillion were completed worldwide in 2023. This was down from the 50,763 transactions valued at about $3.38 trillion in 2022. Last year marked the lowest volume of total transactions since 2013 and the lowest combined value since 2009.

Still, Marsh reported it experienced its third busiest year on record, globally placing transactional risk insurance limits of $49 billion on more than 2,000 policies across almost 1,200 unique transactions, representing over $337 billion in aggregate enterprise value.

“Insureds continued to seek deal protection with representations and warranties (R&W) insurance on transactions across all key industry sectors, increasingly supplemented by tax and contingent liability insurance,” Marsh said in the report.

Transactional risk insurance includes policies that cover risks related to M&A, such as R&W insurance (also known as warranty and indemnity insurance), tax insurance and other types of contingent liability insurance.

North America

In North America, a total of 17,151 transactions valued at $1.67 trillion were completed in 2023. This marked the region’s lowest number of annual total transactions since 2016 and the lowest combined value since 2013.

Marsh pointed to multiple challenges, including elevated interest rates, persistent inflation, valuation disconnects between buyers and sellers, and geopolitical turmoil that contributed to the significant decrease in aggregate deal value in the region compared to the previous year.

Despite the tough landscape, though, Marsh’s North America team placed 1,046 transactional risk policies — primary and excess — on 555 unique transactions in 2023, a 4% increase over 2022, the report said.

Those policies represented $21 billion in limits of liability available to Marsh clients, insuring risk related to transactions with an aggregate enterprise value north of $160 billion — more than in any prior year except 2021, which Marsh said is considered an outlier.

According to Marsh, market conditions softened profoundly in 2023, leading to historically favorable outcomes for R&W insurance buyers. This was driven by continued expansion in supply and weaker demand due to the drop in the number of M&A transactions and aggregate M&A value.

Marsh said North American R&W insurance rates steadily decreased throughout 2023 due to “meaningful price competition returning to the marketplace.”

“While we anticipate an increase in M&A activity in North America in 2024, we believe the current insured-friendly rate environment will continue in the short-to-medium term,” the report said, adding that the crowded R&W insurance underwriting landscape in North America is “expected to become further saturated by one or two new transactional risk market entrants.”


Dealmakers anticipate an improving M&A market during the year, Marsh said. There are expectations for the return of a more favorable financing market, and private equity firms are sitting on more “dry powder” than ever before. The report’s authors noted the prospects of a contested U.S. presidential election may act as a damper on M&A activity post-Labor Day and could adversely impact any positive momentum from the first half of the year.

“Regardless of M&A market conditions, transactional risk insurance is anticipated to remain a key component of deals in North America, with insurers expanding their underwriting appetite to meet client demand,” Marsh said. “Since there is robust underwriting capacity, with firms pursuing transactions in the region increasing, we expect the soft rate environment to continue in the short term. If M&A activity in the region accelerates at the anticipated rate, we could see some more challenging market conditions.”

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