Insights

  • Sub-$20 Million Dollar Deals Can Now Be Covered By R&W Insurance
    POSTED 7.16.19 Insurance, M&A

    As more players in the world of M&A come to realize its tremendous value, there have been several big changes in the use of Representations and Warranty (R&W) insurance to protect Buyers and Sellers post-transaction. (Any financial loss resulting from a breach of the Seller’s representations in the purchase-sale agreement are paid by the insurer because they take on the indemnity obligation from the Seller.)

    I’ve mentioned previously that the number of insurance companies offering this specialized type of coverage is more than 20 today, compared to just four in 2014.

    There are also more policies being written than ever before. A part of that is the fact that just a few years ago insurers only felt comfortable insuring deals of $100M or more, and then only with audited financials.

    Now, they are offering coverage for deals under $20M… in fact, they’ll now go as low as $15M… without requiring a strict financial audit during the due diligence process.

    The reason? The R&W market has matured, so to speak. Insurance companies are more comfortable with it as they’ve had successful experiences with larger deals. Underwriters are familiar with the product and the claims process. (Only about 20% of deals result in claims.)

    Now, insurers are looking to increase their bandwidth and increase the number of clients they cover. And that means they have to look at smaller clients.

    The risks are smaller and can’t be mitigated as much as with larger clients. But by bringing down the rates enough, they can cover the small deals. And because the amounts involved are so low, there isn’t much financial risk.

    Still, sub-$20M deals are different in a few key ways:

    • Fewer insurance companies are willing to cover the small deals.
    • There are few Brokers who truly understand R&W insurance and have the right experience.
    • Of the Brokers who do understand it, there is an even shallower pool of those who are willing – or able – to do work on smaller deals. (Many Brokers prefer the larger risks – and the higher commissions – that come with the big transactions.)
    • Brokers working these small deals need to know which insurance companies will take on these deals and the Underwriters with the right experience on these policies.
    • In smaller deals, you have less experienced parties on the buy side and sell side. For most, it’ll be the first time they’ve encountered R&W insurance, and the Buyer is not inclined to learn about it, so it’s critical that an experienced broker is engaged to guide the parties through the process.
    • The Seller really drives demand on this product, often not being willing to move forward on a deal without it. And for good reason, as they can’t afford to have millions of dollars of exposure out there. They’re not serial entrepreneurs who can survive that loss. They’re ready to collect more cash at closing so they can pay out investors and move on with their lives.
    • Despite the smaller deal size, pricing is still in the $200,000 to $300,000 range, including all fees, premium, and taxes, which is similar to what policyholders pay for much larger deals. Insurers aren’t willing to take any less to make it worth their while.
    • Buyers must do third-party due diligence on the acquisition target’s tax situation, IP, financials, operations, HR, and more as those are the biggest exposures out there.

    There are many more M&A deals on the smaller side that don’t get the press of the big-name transactions. And I think the use of R&W insurance to cover transactions at any level can only go up as it becomes more well-known, especially among PE firms and VC funds.

    I’m an optimist by nature. But if there is a slowdown in the economy, you will see a lot of owners and founders running to the door to close out business – that’ll cause a spike in sub-$100M transactions.

    And in order to capitalize on their return and secure more cash at closing in uncertain economic times, they’ll want an R&W policy covering the deal.

    If you’re involved in an M&A deal under $20M and are interested in the protection that comes with Representations and Warranty insurance, I’d invite you call me, Patrick Stroth, at 415-806-2356 or send an email to pstroth@rubiconins.com. I’m experienced in deals of all sizes and I have the contacts at the insurers to secure the coverage you need.

  • Liquidation Insurance for VC Funds 
    POSTED 7.2.19 Insurance

    There is nothing venture capital funds like more than a clean exit in which they can take their money from sales of portfolio companies, distribute funds as necessary to investors, and then move on to new acquisitions with the money they earned from the sale.

    But sometimes there’s an issue and a VC fund can be sued by a third party well after the sale of the portfolio companies… with the fund being on the hook for millions.

    That’s not such a clean exit.

    Here’s the scenario.

    A VC fund has a portfolio of 10 tech companies. They were all promising startups. Some fared poorly. Some did okay. With such early stage companies, that’s just the cost of doing business. Nobody can tell for certain what startups will crash and burn.

    But some of the portfolio companies did very well in growing quickly and seeing revenues soar, thanks to breakthrough tech products, not to mention guidance from the fund. 

    After a few years, the fund had plenty of potential Buyers come calling. The VC fund was happy to offload several of the portfolio companies, resulting in a tidy profit overall. The fund managers are happy. The investors are happy to see a return on their seed capital.

    But…

    Unfortunately, that fund, a legal vehicle for having equity in those portfolio companies, is still liable for lawsuits from third parties. And the fund also retained an obligation to indemnify the Buyer for contingent liabilities they were unwilling to assume.

    And because a good portion of the capital from the sale of the portfolio companies is still held in reserve for contingent and/or tax liabilities that might come up, that capital is at risk and they are unable to make a final distribution.

    It’s like if you had a bank account for several vacation rental properties you owned. You’ve already sold the properties. But because you still have that bank account with the sale proceeds, you are still linked legally to the properties.

    If this lawsuit from an outside party is successful, the proceeds will come – be “clawed back” – from your reserves held in escrow against potential liabilities.

    But there is a way to speed-up the liquidation of the fund so that all the proceeds can be distributed to investors instead of being held in case of potential clawbacks.

    Fund managers can make a final distribution to the fund’s partners or interest holders without fear.

    With this “fund liquidation insurance” in place, VC funds are able to close the “liquidity gap” after the sale of their portfolio companies and get a clean exit while still meeting the reserve requirement, which is what they’re after, of course, and maximize their returns. 

    This coverage can also be expanded to cover heirs, assigns, estates, spouses, and domestic partners of fund managers. With this insurance in place, policyholders are covered for identified and unidentified contingent obligations that fund managers would otherwise prepare for with reserves or holdbacks.

    Fund liquidation insurance unlocks the millions (in some cases tens of millions) of dollars VCs are forced to keep in escrow/reserve to cover the cost of these potential liabilities.

    Some Private Equity and similar investment funds are also using fund liquidation insurance rather than holdbacks during windups to cover back-end risks and to enable the efficient distribution of a fund’s proceeds to investors.

    Divestments, which can be multi-year liabilities, can be insured, with the risk of clawback transferred completely to an insurance company. This is not Representations and Warranty Insurance (R&W), although the two types of policies can work in tandem.

    This policy will be set up during the final stages of the liquidation process.

    Potential liabilities, which can include sell indemnity caps, escrows, and excesses, are added up to form the policy limit. Premiums for this insurance are 1.3% to 3% of that limit, with an additional premium of 3% to 5% for unknown risks. It’s a low cost, considering all the benefits.

    Another benefit: this specialized type of insurance could also be a deductible expense. Consult with your tax professional.

    For more information on fund liquidation insurance, contact me, Patrick Stroth, at pstroth@rubiconins.com or 415-806-2356.

  • The R&W Insurance Market Grows and Matures
    POSTED 6.25.19 Insurance

    It’s a good time to be alive for Buyers and Sellers in the M&A world.

    The use of Representations and Warranty (R&W) insurance, is more widespread than ever, with deals as low as $15M considered insurable. That’s down from a minimal deal size of $100M just a couple of years ago.

    What makes R&W coverage so attractive?

    It protects both Buyer and Seller if there is a financial loss resulting from a breach of the Seller’s representations that were outlined in a purchase-sale agreement. 

    The insurer covers the losses in case of a breach because they take on the indemnity obligation from the Seller.

    Plus, the number of insurance companies offering this coverage has jumped from 4 in 2014 to more than 20 today.

    The news comes from the latest report from one the largest insurance companies in the R&W and broader M&A insurance space, AIG. The report, their fourth in the Claims Intelligence Series report, is called Taxing Times for M&A Insurance.

    When this report is released, those involved in the M&A industry and Private Equity pay close attention to the trends it highlights.

    The bottom line is that more R&W policies are being written than ever before as both Buyers and Sellers come to understand the benefits such a policy will bring to their deal, such as…

    • Smoother, more efficient negotiations of the purchase and sale agreement.
    • More money at closing for the Seller (escrow is eliminated, and the indemnity risk is placed with the insurance company).
    • An easy route for the Buyer to recoup financial losses in case of a breach post-closing.

    Both sides of the table have a better understanding of how R&W works, not just for their negotiations, but when the time comes for actually “using” their policy.

    That calls to mind another trend of note: more claims are being reported in this space. It’s not surprising as there are more insured deals out there. But never fear, insurance companies do pay claims in this space readily, unlike with some other forms of insurance. And, as of now, the trend of claims isn’t outpacing the premiums generated by R&W, so pricing and retentions will remain steady. 

    Plus, it’s clear that policyholders (the Buyers) are better prepared to work with the insurer to get their claims paid. The more policyholders purchase R&W, the more comfortable they’re getting as R&W impacts their negotiations as well as when a claim does happen, they are better prepared to:

    A) Report a loss at a more favorable time (after the Retention level has dropped down 12 months after closing), and

    B) When they do report a claim, they bring extensive supporting documents to help the insurer process the loss more efficiently and quickly. This comes from R&W claims representatives who work with policyholders directly on claims.

    Note that 74% of breaches are reported to R&W Insurers within the first 18 months of closing. It’s more evidence that policyholders are more sophisticated in the use of R&W, with half of those breaches reported after 12 months when the Retention drop-down provision has been triggered.

    Overall, this is a good sign that R&W insurance is steadily maturing and provides a sustainable tool for M&A.

    Here are some of the raw numbers:

    • In their report, AIG notes that there were 580 claims from the 2,900 policies the company wrote for deals from 2011 to 2017. This finding is based on claims filed (including claims where the amount sought did not exceed the retention amount), not claims paid.
    • Claims were reported on 20% of all deals, with claim frequency at 26% for deals from $500M to $1B in size. Bigger, more complex deals register claims in one of every four transactions. So larger deals are experiencing claims more frequently (1 in 4 as compared with 1 in 5 for sub-$500M deals).
    • Claims severity grew, with the most material claims (valued over $10M), increasing from 8% to 15%, at an average of $19 million. Big losses are getting bigger. On the other hand, smaller Claims (those under $1M) are mostly falling below the policy retention, resulting in no payment by the insurer. Look for insurers to continue maintaining retention levels at the 1%-2% transaction value for sub-$500M deals. 
    • Despite the larger deals experiencing big losses on a more frequent basis, competition among R&W insurers will continue to force rates and retention levels at lower levels for the immediate future.
    • Most financial breaches are discovered during diligence. Undisclosed liabilities are harder to identify which is why they are the largest source (1/3) of financial breaches.
    • Tax related breaches follow right behind financial breaches, with compliance with laws and material contracts rounding out the majority. 

    Buyers and Sellers interested in one of these R&W policies need a broker who specializes in R&W, works on these deals routinely, and is experienced in M&A.

    I’d welcome the opportunity to speak with you further about how R&W insurance could benefit your next M&A deal. You can call me, Patrick Stroth, at 415-806-2356 or send an email to pstroth@rubiconins.com, to set up a time to chat.

  • An Overview of Tax Liability Insurance
    POSTED 6.18.19 Insurance, M&A

    With any merger or acquisition, tax liability is a major concern because when you buy a company you assume its tax obligations. And you can bet the IRS is keeping close tabs on every transaction for taxable events, not to mention state tax authorities.

    Not paying attention to tax treatments that apply to acquisitions could cost a Buyer significantly, and perhaps negate any advantage they had in the deal at all. For example, say a Buyer purchases because they think it has favorable tax deals, but the taxing authority disagrees. Then they’re on the hook for the tax bill.

    But for a low premium, tax insurance, with policy terms generally set at six years, would protect against that disastrous event. Think of tax insurance as an “add-on” to Representations and Warranty insurance, kind of like you add earthquake or hurricane coverage to your homeowner’s policy.

    That might be putting it too lightly, actually. Tax insurance protects a taxpayer (in this case, the acquiring company) if there is a failure of tax position arising from an M&A transaction, as well as reorganizations, accounting treatments, or investments.

    A few examples of where tax liability insurance would be applicable (thanks to RT ProExec Transactional Risk’s recent white paper for this info and other helpful tips in this post):

    1. Historic tax positions of a target entity in an M&A transaction
    2. Investment in clean energy (e.g. solar), new market, rehabilitation, and other investor tax credits
    3. Real Estate Investment Trusts (“REIT”) and their representations as to their REIT status in an acquisition
    4. Foreign tax credits
    5. Preservation of (or availability of exceptions to any limitations to) net operating losses and other tax attributes following a transaction
    6. Transfer pricing
    7. Tax treatment of reorganizations, recapitalizations and/or spin-offs
    8. Debt v. Equity analysis
    9. Capital gain versus ordinary income treatment
    10. Deductibility of expenses (as opposed to capitalization)
    11. Excessive compensation
    12. Deferred compensation
    13. Whether withholding taxes are imposed
    14. Whether distributions constitute a “disguised sale”
    15. Valuation risks
    16. S Corporations and 338(h)(10) elections

    Checking tax status is, of course, part of any Buyer’s due diligence. An outstanding tax bill is easy to find. But certain tax treatments the Seller insists are correct and up to standard, may not be. The Buyer, relying on its tax attorney’s specialized tax expertise, can insist those issues be taken care of pre-sale because they are exposures.

    In the past, Sellers could go to the IRS and ask, “Is this an exposure?” and get a Private Letter Ruling okaying the request. But with the IRS swamped these days, they’re not really issued anymore.

    Where Tax Insurance Comes In

    When there are tax issues that come up for debate during due diligence for an M&A transaction, both sides bring in tax attorneys and each side makes the best determination in their opinion if this is a taxable transaction or not. They could take a light touch or be very conservative.

    The Buyer will likely insist that a portion of any tax liability goes to the Seller, whose expert says they don’t agree with that determination. If there is a disagreement – get tax insurance.

    Underwriters will get letters from tax attorneys from both sides outlining their arguments, along with supporting documents. It’s quite simple underwriting.

    Underwriters want to see:

    • Name and address of the insured.
    • Covered tax descriptions of detailed descriptions of the underlying transaction and the relevant tax issues.
    • Draft opinion from a tax advisor.
    • The tax backgrounds of the Buyer and Seller.
    • Limit of liability the insured would desire.
    • A potential loss calculation, including additional taxes, interest, penalties, claim expenses, and gross-up.

    It generally takes the Underwriters about three to four days to deliver a preliminary response.

    In some cases, M&A transactions can become tax-free transactions or tax-free exchanges. Of course, the IRS can always disagree and insist on back taxes and fines.

    Some things to keep in mind:

    When Underwriters aren’t confident about a specific tax position, they may set retention at where they think the tax authority would settle. When they are more confident, they will be okay with minimal retention by the insured or none at all.

    If a tax memo convinces them that the IRS agrees that it is not a taxable event – good. If not, the IRS triggers an inspection.

    The insurance will pay the legal costs to fight the IRS, as well as taxes, penalties, and fines if they lose. And, get this. If your insurance win was, let’s say, $5 million and the IRS says, “You just made $5 million in income,” the insurance will pay tax on that as well. That is known as a “gross-up.”

    Tax liability insurance is more expensive than R&W (it generally costs between 3% to 6% of the limit), but it makes sense as the stakes are higher. So it should be an important part of any M&A transaction.

    If you’d like to discuss how to protect yourself with tax liability insurance and how it coordinates with R&W coverage (because R&W does not include a Seller’s identified or disclosed tax risks), please call me, Patrick Stroth, at (415) 806-2356 or email me at pstroth@rubiconins.com, to further discuss this vital insurance protection.

  • Why the Right Broker Is Key When Working with R&W Insurance Underwriters
    POSTED 5.21.19 Insurance, M&A

    The typical insurance broker wants to serve all their clients’ needs, especially if it’s a large client that requires various types of insurance to cover its operations.

    The motivation is to be there for the client, who you know well. And the extra commission doesn’t hurt either.

    But although a broker may have the best intentions, if the insurance required is out of the broker’s area of expertise (and no broker is master of all), this practice is actually not good for clients. They’re just not going to get the best value out of their policy.

    When it comes to Representations and Warranty (R&W) insurance, a highly specialized variety that covers M&A deals, this is definitely the case.

    R&W insurance protects both Buyer and Seller if there is a financial loss resulting from a breach of the Seller’s representations that were outlined in a purchase-sale agreement.

    If there is a breach, the insurer covers the losses because the coverage transfers the indemnity obligation from the Seller.

    Buyers and Sellers entering into deals who are interested in one of these policies need a broker who specializes in R&W insurance and does it routinely. Not to mention that the broker must understand how M&A works.

    In R&W insurance, it’s not what you know, it’s what you don’t know that will come back to bite you.

    Here’s why: On the surface, the coverages from one R&W policy to another are very similar. It’s rare when R&W insurance policy verbiage diverges greatly and have material coverage missing, which often happens with other types of business insurance. Within various business insurance programs, many coverages considered “essential” by some are deemed “optional” by others and therefore omitted to save costs (i.e. Uninsured/Underinsured Motorists coverage).

    The scope of coverage for an R&W policy is determined by two elements: The Seller’s reps and the degree to which the Buyer performed diligence on those reps. 

    The key difference between R&W policies comes from decisions Underwriters make as to what degree they’re willing to cover all or most of the Seller’s warranties. This decision is based on two elements: The Underwriters’ appetite for risk in a certain business sector and the amount of diligence performed by the Buyer. It’s essential for the insurance broker to determine to what extent each insurer is willing to cover the majority of warranties, and where there may be flexibility. 

    Unlike other instances when business insurance is considered, R&W is brought to bear in M&A transactions where 100’s of millions are at stake. That’s both exhilarating and terrifying for the parties. Often times, Buyers and Sellers haven’t used R&W before, so they have no idea what to expect from the process. They need a “steady hand” to guide them, manage their expectations and inform them as to what they can expect.

    Brokers who lack experience in placing R&W will struggle to navigate the underwriting process. Ultimately, this can put their clients through unnecessary stress due to delays and “surprises” that an experienced player can anticipate and prepare for.

    An example would be to prepare Buyers for the time and access Underwriters will need with the Buyer’s team to review the diligence performed and which outside parties participated. Brokers unfamiliar with R&W might fail to prepare their clients for this, which can result in a huge burden on the Buyer.

    It’s All About Who You Know

    A broker’s relationships with Underwriters at different insurance companies is essential. Different insurers have different appetites for risk. A qualified broker, who are also experienced with M&A, knows who does what.

    Some insurers are comfortable with healthcare deals and the added regulatory scrutiny they bring.

    Some insurers are comfortable in the up-and-coming cannabis market. (Actually, there’s only one insurer in this market so far, but more will ultimately follow.)

    Some insurers will cover certain deals but only with so many strings attached that the client won’t actually qualify, or the cost will be too high.

    Insurance companies’ appetite for certain risks can change over time, and a savvy broker will keep track of these trends.

    R&W policies cover complex business deals – and the Underwriters typically don’t know every industry well. That’s where the broker comes in to match the right Underwriter with experience – and interest – in a certain space for the deal.

    Getting the Deal Done

    A good broker/Underwriter relationship has other benefits.

    First, a good broker sends information the Underwriters need without waiting for them to ask. That means coverage is obtained that much more quickly.

    Just like anything in life, when you know someone, things just go smoother. This is particularly true on smaller deals, in which Underwriters have to deal with less due diligence provided by the Buyer.

    Some insurers will penalize the Buyer for having less comprehensive due diligence. But a good broker can be a go-between and mediate in that case.

    For example, say the financial statements were reviewed but not officially audited. The broker can explain why that was the case and why it’s okay. A trusted relationship makes it possible.

    The Value of “Neutrality”

    Typically, both Buyers and Sellers have their own brokers handling their respective insurance programs. When those brokers see the premium sizes (and the resulting commission) from R&W policies for big deals they say, “Sign me up.” They’re not qualified, but they’re certainly not leaving that money on the table and are willing to dabble if given the chance. This creates unnecessary friction between the parties as they argue on behalf of their “guy” or “gal”.

    The best approach is to select an independent specialist who will only handle the R&W placement. There would be “zero conflict” with the incumbent brokers as R&W is a one-time deal that doesn’t touch any other policy.

    That neutral broker will have a fiduciary responsibility to the Buyer (R&W policyholder) to provide the broadest level of protection, while committed to delivering a variety of options that are budget appropriate in the interests of the Seller (who often shares in the cost of R&W).

    That’s why a neutral broker who knows R&W best practices and has the clients’ best interest at heart will get the ideal outcome for both sides.

    Where to Go from Here

    There’s no shortcut for a broker who has experience and has had working relationships with Underwriters for years. With that comes mutual respect. If there are disagreements or contentious points, they are easier to work through.

    In an M&A deal, Buyers and Sellers should not rely on a broker who does their other insurance to secure their R&W policy. Get a specialist.

    A number of Underwriters have already “trained” me. I know the inside track. They know I’ll run the process the way they need to provide the best policy in a timely manner.

    I’d be happy to discuss with you how Representations and Warranty insurance could benefit your next M&A deal, as well as the costs. Please contact me, Patrick Stroth, at pstroth@rubiconins.com or 415-806-2356.

  • When Insurtech Works… and When It Definitely Doesn’t
    POSTED 1.16.19 Insurance

    You’ve seen the commercials on TV.

    You visit a website and easily apply for insurance for your home or car, getting quotes from multiple companies at the same time. Some types of health insurance even work like this.

    The advantage of these online marketplaces is you don’t have to go through the time-consuming process of calling or visiting an agent to get your policy… who might even try to upsell you on other services. It can be a real chore.

    I have no problem with this so-called “insurtech” when it’s used to secure these relatively simple types of “consumer” insurance faster and easier.

    When it comes to any sort of insurance product with the least bit of complexity, however, insurtech should be just a first step to give you a ballpark idea of what’s out there.

    And, you need an expert helping you in person when you go beyond this Step 1 to ensure you get the coverage you need.

    Take the popular online legal services website, LegalZoom. They make it super easy to set up articles of incorporation. But if you’re a startup looking to attract serious investors, doing so would lose you all credibility. And you couldn’t be certain your business was structured correctly.

    With insurance, you could potentially go “DIY” and try to do your own research to figure out which option is best for you as far as type of policy and level of coverage. But if something goes wrong down the line and you discover a certain risk isn’t covered, it’s all on you.

    You could sue the insurance company but… good luck there.

    What You Should Do Instead

    You need an expert who does this for a living and knows specialized types of insurance like Representations and Warranty (R&W), which covers M&A transactions, as well as Directors and Officers liability insurance, Cyber Security insurance, and more, inside and out.

    If you deal with a broker, you not only have an expert to answer questions. The broker is also accountable. By law, they have a fiduciary responsibility to look after your best interests. If they make a mistake, you have someone to go after.

    These brokers may not be available 24/7 like an online marketplace, but they have the specific information you need and the answers to your complicated questions, backed up by years of experience dealing with these issues every day. That peace of mind is priceless when so much money is on the line.

    And, speaking of money, the difference in what you’ll pay in fees for an online marketplace versus an in-person broker is not as much as you might think. A bargain compared to the millions of dollars that change hands in a typical M&A deal.

    When you use a broker, you get responsiveness and expert-level input to make sure you get the right policy.

    Let’s use an example from the auto insurance world.

    On-line auto policies provide Liability and coverage for physical damage to the car (Comprehensive/Collision coverage), which most buyers understand. To keep costs down, buyers only select the coverages they think they need at the lowest Limit possible to comply with the law.

    The danger, is these “optional” coverages purchased at levels solely dictated by price, can leave drivers seriously unprotected. 

    In the case of Uninsured motorists – a driver will be left paying his medical bills and those of his passengers if his car is struck by someone with little or no insurance (think drunk driver). 

    Worse is when young adults (the “m-word”) living in their parents’ home purchase a tiny amount of insurance thinking they have no net worth at risk. They later find a court will likely allow attorneys to pursue their parents’ home for compensation because of their residence – so the house is “fair game”.

    This is no problem when there is a savvy broker involved. They’ll ask the questions necessary to understand what’s at stake and they can provide complete explanations of coverage, so buyers can make an informed decision.

    When an Expert Makes the Difference

    When it comes to complex insurance like Directors and Officers liability and R&W, only where the needs are very simple can I say that insurtech is the way to secure a policy.

    The vast majority of situations and transactions are much too complex. In the case of R&W insurance, this coverage is intimately intertwined with an M&A deal and is a major component of the negotiations. Underwriters need quite a bit of information before they’re confident in writing your policy. That’s not something you can handle online.

    In these cases, you need someone on your team who can put together a “patchwork” of different coverages and policies so there are no gaps… and no overlapping that causes you to pay too much.

    The layman can’t read through the policies to figure that out on their own. This complexity is why brokers are licensed and regulated.

    If you’re looking at securing a specialized type of insurance like Representations and Warranty, Directors and Officers liability, or Cyber Security, bypass the online portals and talk with an expert.

    I’m happy to jump on the phone or answer your questions by email. You can reach me at (650) 931-2321 or pstroth@rubiconins.com.

  • The Importance of Cyber Security
    POSTED 1.2.19 Insurance

    A phishing attack on UnityPoint Health, a hospital and clinic system in Illinois, Wisconsin, and Iowa in March 2018 resulted in 1.4 million patient records being compromised.

    In April 2018, hackers were offering up 5 million credit and debit cards online to the highest bidder, stolen from luxury department stores Lord & Taylor and Saks Fifth Avenue.

    Read More >

  • Four Ways to Protect Yourself From the Fiduciary Liability Litigation Machine
    POSTED 10.8.17 Fiduciary, Insurance

    The scene – an unnamed company. A new CFO was appointed and installed as the 401(k) plan administrator. He replaced the 12 investment options offered before with three mutual funds. It turns out his brother managed those funds. A clear conflict of interest with regard to the 401(k) plan – enough to trigger serious legal action.
    Read More >

  • The $11,000 Per Day Liability, “Hidden” Inside Your Health Insurance
    POSTED 9.20.17 Fiduciary, Insurance

    If you’re offering health insurance to your employees, you may not know it, but there’s a “hidden” liability waiting inside your plan. It’s waiting for you, the fiduciary of the plan, to make a simple clerical mistake. When you do it will cost you $110 per day, per employee. For a 100-person firm, that’s $11,000 PER DAY!
    Read More >

  • Actionable Ideas: This New Approach To Med-Mal Tail Insurance Adds Hundreds Of Thousands Of Dollars Of Profit To Healthcare M&A Deals
    POSTED 8.18.17 Insurance, M&A

    Rep & Warranty Insurance is a well-known tool to reduce risk and increase cash flow for the M&A industry.  But what if your deal is too small (under $50M transaction value) for R&W?

    There’s hope for one of the most active sectors in M&A – healthcare, where news of a lesser-known tactic for saving money is all the more important for physicians, owners of healthcare firms and their advisors.
    Read More >