Portfolio Purchasing

Marsh USA

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Published: 06-Apr- 2011 | Product Category: Private Equity and Mergers & Acquisitions (PEMA) | Comments: 0

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Property, casualty, and health insurance can represent a significant percentage of selling, general and administrative expense for most portfolio companies.

Financial sponsors who have aggregated and coordinated the procurement of insurance on behalf of their portfolio companies have consistently delivered better than market pricing, mitigated market volatility, received enhanced terms, and ensured consistent risk management practices across their portfolios.

Background/Rationale:

portfolio programs harness untapped purchasing power;
portfolio operational efficiency and profitability are at the forefront;
portfolio programs facilitate successful exits/maximum returns; and
superior portfolio support enhances opportunities to win targets.

Advantages

creates an equity sponsor “brand” in the insurance marketplace;
enhances market competition by consolidating portfolio insurers;
ensures enhanced coverage for all participants;
custom-tailored to each equity sponsor’s industry specialties and geographic distribution;
provides pricing advantages for large and small companies alike;
enables new investments to roll into superior program post-close;
provides downside protection against market volatility and adverse loss experience;
provides statistical tracking of results;
facilitates exit; programs are “transportable;” and
enables better coordination of equity sponsor/portfolio management liability risk.