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IPO insurance: Covering liability risks from the IPO
and capital market liability

"We are one of the few insurance brokers with proven expertise in capital market transactions (e.g. IPO/SPO/bonds). As an owner-managed insurance broker, we can promise you leading expertise and continuity even when the stock market window closes. This has become a unique selling point in the "war of talent".

Björn Stressenreuter - Managing Director Risk Partners GmbH

Conscious understanding of risk in all phases of growth up to the IPO

Be it the climax of an entrepreneurial story, the channel for further growth financing or the "exit channel" desired by financial investors. With Risk Partners, you have an experienced transaction team at your side during the IPO, which will guide you through the special requirements of the various stock exchanges and liability regimes with tailor-made insurance cover and integrate perfectly into the project team (usually closely with the Issuer Council) thanks to its extensive experience.

We understand the challenges and liability issues in all phases of growth and focus in particular on a possible IPO with suitable protection for the management.

Knowing that your situation is individual, we would like to take up selected scenarios and the associated insurance-related issues below in order to recommend that you involve our expertise at an early stage. This is often the key to an economically viable and resilient protective vest when things get rough on the capital market:

a) Public as a VC-financed "growth company"

For Scaleups, the IPO represents the achievement of a milestone. After tough financing rounds in 18-24 month cycles, the company should have another financing option on the trading floor. In our experience, the situation on the insurance side is often such that risks from the pre-IPO phase and from triple-digit issue proceeds are met with comparatively small insurance programs. The reason for this is losses accumulated during the growth phase, which severely limit the capacity of D&O insurers. Unfortunately, the insurance market takes a contrary position compared to VC funds. A number of questions therefore need to be clarified with the founders and management:

  • Is the D&O insurance program "IPO-ready"?
  • Is the past "pre-IPO" sufficiently covered? There is often an opportunity to optimize this in the context of a D&O/POSI request.
  • Is the "selling/controlling shareholder" risk to be hedged depending on the remaining founders' share in the company?
  • In the context of the underwriting agreement, do the banks wish to be covered by the issuer as part of the POSI insurance? The latter is a very important aspect for banks, especially for growth companies "post Wirecard", and should be addressed at an early stage.

Risk Partners on the Deutsche Börse podcast

Exclusive

As a specialist broker for capital market liability, our Managing Director Florian Eckstein had the opportunity to record a podcast with Alexander Rang, a leading capital market lawyer in Germany, for Deutsche Börse's "Road to IPO" series and Joel Kaczmarek (digital kompakt). Prospectus liability insurance (POSI) plays an important role, as do other valuable aspects of risk and liability management. Listen in as Alexander and Florian share relevant tips and best practices on liability and insurance strategies from their stock exchange projects.

Play video
Listen via Deutsche Börse

b) Carve-outs / spin-offs - knowing conflicts of interest in D&O and prospectus liability

Very similar questions of liability also arise for carve-outs / spin-offs of already large groups whose spin-off is intended to deliver strategic added value. These projects are often particularly sensitive when it comes to questions of independence of governance and compliance structures or when "corporate policy" has an influence on the future orientation and structure of the spin-off. Questions of liability from the point of view of the parent company's management need to be clarified, but above all what the new D&O cover of the spin-off will look like.

  • How are possible breaches of duty in the former capacity as a group subsidiary covered under the new D&O insurance (retroactive coverage possible / ideal?) Does a comprehensive subsequent notification period of the ex-group D&O apply (run-off until limitation period)?
  • Who bears the costs of subsequent liability?
  • What if only going-forward cover can be purchased because insurers are already providing their maximum capacity on the (former) parent company's D&O program?
  • How can high capacities be purchased on European markets at reasonable premiums for the carved-out company?
  • And how does the issue of prospectus liability play into the questions of D&O insurance programs, which must be covered independently if the issuer (=the company to be carved out) and the parent company both collaborate on the prospectus and are ultimately liable for it?

c) BioTech IPO as part of student financing

Not least the Covid 19 crisis showed that cutting-edge research is being conducted in Germany. However, translating cutting-edge research into approved drugs requires studies that entail considerable financing requirements and risk. While the VC sector with a focus on life science is an important "start-up source" alongside strategists, the capital market plays an important role for these companies at an early stage. While only a few European capital markets are still being targeted at present, or in some cases this is seen as preparation for listing on the NASDAQ, it is mainly European (including the UK) capital markets that enable the transfer of US liability risks. Here, too, it is advantageous in terms of content and economics to involve the options and insurance markets at an early stage:

  • For example, can the IPO Flip developed by Risk Partners Flip-D&O Insurance developed by Risk Partners?
  • Which risk carriers are critical for success and should ideally be visited 1-2 years in advance, e.g. in roadshows, in order to create trust?
  • How do you make the best strategic use of the more volatile UK and the more stable (and in some cases more expensive) European insurance market?

Ask for our free pre-IPO readiness check of your D&O insurance and book a non-binding appointment with the experts at Risk Partners

How we help you on the Road to IPO

Road to IPO: Streamlined process with experts

Risk Partners specializes in IPOs on a German stock exchange as well as being one of the few specialists for IPOs in the USA . Due to the different liability and insurance markets, among other things, the requirements and success factors are different, so we have split them up for you in the following section. Simply select your intended stock exchange and contact us if you have any further questions.

Step 1

Joint kick-off

Get to know your risk partners
  • Accession NDA by Risk Partners
  • Coordination of communication routines
  • Coaching of the person responsible for the insurance stream (process, behavior of banks, WPs, etc.)
  • Coaching for management and supervisory boards on capital market and prospectus liability
    • Explanation of coverage options in the context of D&O and the tendering process
  • Analysis of the existing:
    • D&O insurance (non-public)
    • Cyber insurance
    • Criminal legal protection
    • Further relevant insurance for need for adjustment with "going public"
Step 2

Start tender(s)

Contact with coordinated target markets
  • NDA coordination with insurers
  • Analysis of the sum insured on the basis of the planned IPO parameters (market cap, proceeds, shareholder structure post-IPO etc.)
  • Development of attractive "risk stories" for each insurance market ("one-pager risk partner risk profiles")
  • Prep meeting with management in preparation for a marketing meeting ("underwriting call") incl. review presentation
  • Leading the underwriting call with agenda and Q&A session
Step 3

Negotiations

Teamwork @ Risk Partners
  • Negotiation of insurance conditions, premiums, deductibles, etc.
  • Negotiating and moderating warranty statements and reservations
  • Partner coaching on compliance with the regulatory regime (e.g. SEC / BaFin) with our network of lawyers (if desired)
  • Preliminary Management Board presentation with tender results
Step 4

Coordination of target concept

Teamwork @ Risk Partners
  • If applicable, final Q&A with decision-maker and order to implement the target concept
  • Target concept is finalized with 1-25 insurers:
    • Warranty statement countersigned by CEO/CFO
    • Eliminating further reservations on the part of insurers
    • Ensure a smooth transition from non-public D&O (subsequent liability, run-off, etc.) to public D&O (continuity date, etc.)
    • Placing IPO cover and obtaining confirmations of cover
Step 5

Support

Teamwork @ Risk Partners
  • Q&A from stakeholders (auditors, banks, ECM lawyers)
  • Advice for insured persons
  • Training courses
  • Market news and analysis
  • Lawyer network
  • Support in the event of a claim
Step 6

Renewal

Teamwork @ Risk Partners
  • Revision of the renewal strategy based on current data and developments regarding market cap, shareholder structure, M&A activities, progress in business performance, etc.
  • Advice and training on adaptation requirements, scenario analyses, market changes
  • Reflecting on current case law and damage trends 

Differences between going public
USA versus Germany

Ideally, the right concept for you should be drawn up at an early stage (ideally 24-36 months in advance with D&O Flip Insurance). If there are still uncertainties at this stage regarding the intended stock exchange (dual listing), a listing in the USA is always preferable if the probabilities of occurrence are the same. Due to the significantly higher risk and associated costs, the added value for you here is even higher than on a European trading floor. In the following section, we would like to explain the above process in more detail, depending on the respective stock exchange. Click on the image for the stock exchange you are interested in to find out more. On request, we will add further stock exchanges (Nasdaq Stockholm, Australia Stock Exchange) here in the future. Please do not hesitate to contact us.

Success factors for going public on the Frankfurt Stock Exchange

a) Preparations for an IPO (D&O / POSI insurance and criminal legal protection insurance)

  • Build trust! An IPO is also a high-risk event for insurers. We have had good experience in selecting the insurer of the non-public D&O insurance with a view to the IPO. It should be borne in mind that not all D&O insurers go public, which means that an unsuitable insurer will automatically terminate the insurance. There can be a number of disadvantages associated with changing insurers (continuity date, claims in the context of the pre-IPO process, preparatory actions, exclusion of past breaches of duty)
  • Furthermore, an open dialog regarding the stock exchange is recommended. It should also be possible for the insurer to "go along with a US IPO", which can be an option for life science companies in particular.
  • We have developed special "pre-IPO" D&O insurance concepts in both the European and UK markets in order to build up the "trust" factor with the right insurers in the best possible way.

b) Adjustments Risk and the D&O insurance program during the "warm up" to the IPO

  • As part of the preparations for the IPO, there is often a change of legal form and a restructuring of the organizational chart, also with regard to the equity story. These can already have a significant impact on the current D&O insurance cover, so you should coordinate these changes with us confidentially and we will then examine the need for adjustments.
  • Caution is also required when changing the legal form (GmbH -> AG or SE) in view of the increase in liability due to additional duties of care and responsibilities arising from the German Stock Corporation Act (above all Section 93 AktG), as well as the now applicable "two-tier board structure" (dualistic system), consisting of an executive body (management board) and a supervisory body (supervisory board). This goes hand in hand with the need for advice on D&O insurance

c) The hot phase begins: In addition to the D&O insurance program, the focus is shifting to prospectus liability

  • If one of the upcoming stock market windows is announced, work begins on the regulatory and marketing documents. The prospectus is the central document for every major IPO. Ideally, we already embed the first submission of the prospectus - even without figures - in the marketing process of the prospectus risk. As there is an overlap between D&O and POSI insurers, we can build on the trust already established (see b)). In addition, we are happy to support the underwriting of insurers by providing a well-founded outline of the D&O/prospect risk in our Risk Partner Factsheets
  • Decisive success factors of Risk Partners in the transfer of prospectus and D&O risk are, in addition to a great deal of know-how in the preparation of a transparent and coherent risk story (Risk Partner Factsheet) around the IPO, an individual elaboration of the insurance and program strategy as well as the established network and relationships in the European and UK insurance market, so that we ensure the maximum competitive environment for you.
  • A well-prepared underwriting call with your top management and the insurers' decision-makers plays a central role in the IPO tender process. The aim of this underwriting call is to strengthen the confidence of the underwriters in the transaction and to clarify questions from the underwriters that do not arise from the public documents and submissions. This extended provision of information reduces the "residual risks" from the insurer's perspective, which would otherwise be priced with a risk premium for the unknown. With this special marketing process, we therefore create economic and content-related advantages for the best possible risk transfer.
  • In addition, we recommend holding a workshop in advance in which we guide the head of insurance through the process, for example, in order to prepare you as well as possible for internal meetings and questions. The interests and behavior of auditors (comfort letter) and syndicate banks will also not surprise you afterwards if, for example, you are approached by the banks with requests for changes to the terms and conditions of the POSI insurance. We are familiar with these discussions from numerous projects and can provide you with the answers in advance.
  • We are familiar with milestone reporting on the progress of the tendering process and can adapt the communication to suit the addressees (Management Board, Supervisory Board, IPO Committee, etc.).

Why is D&O insurance alone not enough?

If we are mandated directly in the run-up to the capital measure, we carry out an insurance due diligence in which, in addition to the D&O insurance, other company insurances are also reviewed. The risk of (ultimately unfounded) criminal prosecution increases significantly when a company goes public. In addition, we have seen in past projects that certain corporate insurances come into focus and, in case of doubt, are also included in the prospectus. The latter depends on the risk profile or the equity story, e.g. financial loss scenarios for IT & tech companies or potential IP disputes. As these are also regularly issues for the "risk taker" (insurer), we recommend dealing with them in advance so as not to have to deal with them in the hot phase or even rely on such a good argument as"... the issuer has tailor-made insurance cover for this with renowned insurers ...". With this in mind, we would like to introduce you to the increasingly important prospectus liability insurance (also known as POSI or IPO insurance):

First of all, this prospectus liability insurance does not apply as a stand-alone insurance in every capital market transaction. Rather, we will be happy to advise you depending on your individual situation:

  • which stakeholders "demand" protection (banks, auditors, selling shareholders),
  • how high is the risk (planned proceeds, deal structure: e.g. listing, dual listing, SPAC, De-SPAC, pure capital increase)
  • which stock exchange is the target (Frankfurt, Amsterdam, NASDAQ, NYSE etc.),

whether separate POSI insurance (also known as IPO insurance) is available, at what cost and whether a stand-alone POSI makes sense or whether it is preferable to integrate parts of the prospectus liability risk into the D&O insurance (as a module or woven into Side C).

Sidenote: Securing a US listing requires special insurance structuring and also partners beyond Europe. You can find out about our solutions and special experience for a listing or IPO in the USA, such as NASDAQ or NYSE, by clicking on the other picture at the beginning of this section.

SPACs/De-SPACs are also often faced with the challenge of being able to take out stand-alone POSI insurance, so we recommend including this as part of the D&O insurance and can also provide comprehensive advice on this. Our team has also already gained experience in SPAC/De-SPAC transactions in Europe. You can find more detailed information on POSI insurance on our POSI topic page.

So what constitutes separate prospectus liability insurance (POSI)?

Credit to Visual Capitalist for the graphics
  • D&O insurance is a complementary insurance concept, but only covers part of the prospectus liability risks. To make matters worse, a capital market transaction is one of the increases in risk to be reported under D&O insurance, meaning that the insurer can also deny cover retroactively (note: this is why we always consider the parallel D&O insurance stream in addition to the "POSI stream")
  • POSI as "classic" liability cover therefore means the:
    • Examination of (prospectus) liability in capital market transactions (IPO/SPO, bond, etc.)
    • Assumption of the costs of legal defense against (un)justified claims (legal protection function); this includes both civil and criminal claims
    • Assumption of compensation for justified financial loss claims (indemnification function of claims for damages) to protect affected companies/insured persons
  • Term based on subsequent liability:
    • (Un)justified claims can also be made years after the IPO. Unlike D&O insurance, for example, which renews annually, POSI insurance is taken out as project cover with subsequent reporting periods of 12 years as a rule and therefore has no risk of change
    • Project cover also means that the insurance premium is paid as a single premium, but can be accrued and distributed over the entire liability period (up to 12 years) as deferred income
  • Project-specific scope of insurance:
    • In contrast to D&O insurance, for example, the definition of the insured event focuses on the liability risks associated with the IPO. For example, not only claims based on the prospectus, but also missing/incorrect information in cornerstone agreements, roadshows, etc. are insured. It is therefore much more a question of protecting the entire process.
  • High capacities possible:
    • Depending on the respective market environment, considerable sums insured can be purchased in POSI insurance in addition to D&O insurance. In the 2010s, for example, up to EUR 1 billion in insured sums could be purchased; currently (as of 2024), we again see EUR 300-400 million in insured sums as feasible with good risk profiles
  • Extensive group of insured persons / companies:
    • Directors and officers and other involved persons of the issuer (more specific for this risk than the D&O insurance catalog)
    • the issuer as policyholder and also all participating subsidiaries that provide data and information as part of a scope of consolidation when preparing the prospectus
    • Optional: participating syndicate banks and their employees, who are jointly and severally liable with the issuer for the prospectus vis-à-vis the shareholders and have the protection assured in the underwriting agreement. Tip: Due to the unclear use of terms, among other things, the expectations of the banks involved should be clarified at an early stage, as the more time there is for marketing, the better the conditions usually are
    • Optional: Selling and controlling shareholders must participate in both the opportunities (issue proceeds or higher liquidity of their own shares) and the risks (liability and costs) as a result of the groundbreaking DT-3 case law. Accordingly, prospectus liability can also personally affect the otherwise very limited shareholder liability in corporations. By means of an additional provision for "selling/controlling shareholders", the protection of prospectus liability can be extended to include this group of stakeholders. We often see this with private equity investors or carve-outs/spin-offs, where the parent company/holding company also wants to be covered against claims as a co-insured company
    • Optional: The auditor(s) who, as part of the work for the comfort letter, are indemnified against liability above a certain amount. In addition to covering the remaining risk of the issuer through indemnification via POSI insurance (indirectly via the bank module, directly via the auditor clause), we also discuss alternatives with you (comfort letter financial loss liability cover) in order to increase the indemnification of the auditors and remove the risk from the issuer's balance sheet.

What does POSI insurance not cover?

  • Deliberate breaches of duty
    • However, defense costs are covered until the final court decision (reimbursement to the insurer of the benefits paid up to that point is required if intent has been established by the court) -> Conditional intent is therefore even covered
  • Direct personal injury or property damage
  • Contractual penalties, fines, monetary penalties & punitive damages
  • Claims of insured companies for internal claims in the USA
  • Known breaches of duty that have already been disclosed in the Warranty Statement

Why Risk Partners should support your IPO project:

Market-leading conditions from Risk Partners:

  • Proven in claims, IPOs and capital market transactions in Germany, the Netherlands and numerous US IPOs of foreign filers
  • Consideration of the special conditions of national and international market specifics. Adaptation to multi-jurisdictions possible, e.g. if the stock exchange and headquarters are located in different countries and different liability regimes apply
  • Accepted and jointly developed by leading ECM law firms (especially on the issuer side), auditors and consultants

Professional, "lean" process thanks to our specialization:

  • In addition to the streamlined integration of the insurance stream into the project planning, we know the needs of various stakeholders at certain points in the project and prepare you accordingly
  • We clearly state what is required from you or the law firm(s) commissioned for the prospectus with a clear timeline in order to conserve your top management's busy time as much as possible
  • Coaching on liability and, on request, a briefing for your top management prior to an underwriting call for the best possible marketing on the European insurance market
  • On request, we can provide you with all our documents in English and communicate accordingly

Creativity and
innovations

  • We ourselves have developed a number of conditional innovations and extensions of cover for IPO risks in recent years, which have also been adopted by leading law firms and are now being demanded again in new transactions. We understand current trends in regulation and legislation, as well as claims trends, and are therefore constantly developing the concepts for "best in class" insurance cover
  • Special know-how and track record from numerous transactions. - Ask for our references from DAX 40, MDAX, Scale, US listings, SPACs/ De-SPACs
  • In addition to our international network partners, we are also regularly on site in London and other important markets (Spain/Austria) to personally market our clients' risks. Our long-standing relationships with insurance partners ensure further marketing opportunities and the best results in terms of premiums, as we consistently integrate international insurance markets into the tendering process and thus "challenge" offers globally for innovations and premiums.

Experienced deal team on every project:

  • We are experts consisting of fully qualified lawyers, business economists and risk managers, so that we meet the challenging discussions with all stakeholders at eye level and also speak their "language". (from investment banks and their law firms, management boards, supervisory boards to auditors)
  • We are familiar with the special pressure and project management of the often tight project timelines. We are available for you at any time during the project, even at weekends
  • Florian has already managed the IPO project himself from the "in-house perspective" of a DAX 40 company and therefore also knows the issues of the supervisory board, as well as the processes between the stakeholders and the preparation of the prospectus at first hand.
  • Database on prospectus liability in Germany

Success factors for going public on a US stock exchange

USA: strictest organ liability in the world

Managers whose companies are listed on a US stock exchange such as NASDAQ or the New York Stock Exchange (NYSE) bear a particularly high risk. In addition to the advantages of the US capital market, such as a broad and more open field of more risk-averse investors and marketing opportunities, the higher costs and, above all, the significantly higher liability of a transaction in the USA are disadvantageous. Below we show you the IPO process using the "insurance" workstream, as well as the liability risks for you as a board member, supervisory board and for your company in a US IPO.

Our services for foreign filers in the context of the US IPO:

  • Development of an insurance and marketing strategy ("how to market the risk of the IPO company properly in terms of markets, limits, deductibles")
  • Guiding C-Level: Coaching for management and supervisory boards on personal liability, as well as capital market and prospectus liability under US and EU law. We explain coverage options within the scope of D&O insurance in an understandable way for all stakeholders.
  • Prep meeting with the management in preparation for a marketing meeting ("underwriting call") with the insurers for the best tender results
  • Regular check point updates with the Board on project progress (Management Board & Supervisory Board, if requested)
  • Individual exposure analysis with data on benchmarks (peers from market cap and industry) and loss scenario analysis for objectified selection of sums insured
  • Ideally use of the IPO Flip D&O Insurance developed by Risk Partners 12-24 months in advance
  • Tendering and marketing with global insurance market and our strategic cooperation brokers also in London, Bermuda and the USA.

 

The special liability risks in the context of a US IPO:

"Around one in five companies is sued in the first three years after the US IPO. There are differences depending on the industry, but all industries and companies face the risk of plaintiff-friendly conditions under US law. Especially in the first three years after the US IPO, regulations such as Section 11 of the US Securities Act 1933 are the basis for a US class action against the management and the company."

What is civil liability under Section 11 of the US Securities Act 1933?

Section 11(a) and (b) of the US Securities Act 1933 provide for strict liability (tort liability) for issuers who make material misstatements, misrepresentations or omissions of information in the issuance of securities in connection with the disclosure requirements of a public offering of shares, such as an IPO or SPO. Essentially, liability under Section 11 covers errors relating to the prospectus, a private placement memorandum, a registration statement, but also general disclosures, e.g. during a road show, investor conference, etc.

What are the requirements for tort liability under Section 11?

To be liable for a Section 11 violation, the issuer must make a material misstatement or omission of information in the transaction. An individual, such as the directors, may be held liable if the final registration statement (filing documents with the SEC) contains the following:

  • untrue statements of material facts;
  • omits any material fact required by any law or governmental regulation; or
  • omits information that renders the information provided materially misleading.

The "threatening" aspect of this strict liability is that the plaintiff does not have to demonstrate or prove that he relied on the statement. It is sufficient if he proves that the information was incorrect or misleading. The limitation is that the purchaser of the shares must not have known at the time of purchase that the information was erroneous or misleading. Finally, the securities purchased by the plaintiff must be traceable to the relevant registration statement or disclosure document. This requirement is easy to meet in an initial public offering, but may be difficult in subsequent purchases of shares issued in private offerings.

Who is potentially liable?

The Issuer is potentially liable under Section 11. In addition, Section 15 makes any person or company controlling an Issuer potentially liable. This provision provides for joint and several liability for the controlling person or company in accordance with the principles of agency. Liability also extends to those who sign their name to confirm the truthfulness of the information (signatory/representative). This generally leads to potential liability for company directors (management board and supervisory board), underwriters and others involved in the preparation of the registration statement or prospectus. Any signatory can rely on their duty of care, although it will be difficult for a CEO and CFO who are insiders to raise this defense. The due diligence defense relates to the effort and care the signatory exercised in verifying the misstatements or omissions. Section 11(e) provides for rescission of the transaction (together with interest) or compensation for damages (loss) suffered as a result of the subsequent sale of the securities.

How high is your "exposure" as a director of a foreign filer? - Calculation of the securities class action exposure

The special liability situation and public scrutiny of securities class actions does have one advantage - namely a high level of transparency of the lawsuits and their outcome. In contrast to many other jurisdictions, the data on securities class actions (SCA) is published in the USA. It is therefore very easy to analyze,

  • which sectors are particularly affected by SCAs,
  • Causes of the complaints,
  • A plaintiff's prospects of success ("dissmissal ratio"),
  • Settlement data and liability for damages regarding the amount of a settlement concluded

Example of a securities class action
analysis via Risk Partners

Securities Class Action (SCA)
Exposure calculation
Scenario
50% price slide
Share price
Market Cap
Starting course
$ 15.50
$77.500.000
Price slide to
$ 7.75
$38.750.000
Total ADS outstanding
5.000.000
Less "friendly" shares
(1.500.000)
Potential "critical" shares
3.500.000
Price slide per share
$7.75
Potential securities class
Action exposure
$27.125.000
50% percentile
75% percentile
85% percentile
Potential SCA exposure
$27.125.000
Comparison ratio (SCA)
18,40%
34,70%
51,30%
Estimated comparative value
$4.991.000
$9.412.375
$13.915.125
Expected SCA
Defense costs
$2.000.000
$3.000.000
$4.000.000
Total SCA potential
(estimated)
$7.000.000
$12.500.000
$18.000.000
Budget for
"linked" claims
$3.000.000
$4.000.000
$5.000.000
Complete
Damage potential
$10.000.000
$16.500.000
$23.000.000
We can discuss your desired level of security with you in detail. Should the sum insured in your D&O insurance program be based on a loss event that statistically occurs every 2, 5, 10, 20 or Y years? You can also base your reserve planning for potential disputes on this.

Information requirements of the insurance stream

To assess the risk, the underwriters will request a range of information after the NDA has been signed. In addition to the IPO actually taking place, the final commitment will be linked to reservations. Depending on the tactical situation in the process, it may also make sense to have draft versions "approved" in order to constantly reduce the risk of receiving a rejection. We therefore recommend setting up the interface between the ECM lawyer and us in the area of information management at an early stage; the cooperation may already be well established from previous joint projects.

What documents are required as part of a tender

  • IPO risk questionnaire (incl. details of banks, auditors, law firms involved, transaction structure, etc.)
  • IPO timeline
  • Prospectus / F1-Filing (current draft and final version)
  • Underwriting Agreement (from draft)
  • Roadshot Pressentation if necessary
  • Signed Warranty Statement (ideally before the Raodshow)

Why Risk Partners is THE partner for foreign filers and US IPOs?

Market-leading conditions from Risk Partners:

  • Proven in claims, IPOs and capital market deals for numerous US IPOs of foreign filers // Our founder Florian has already successfully defended two US class actions himself as insurance manager of a DAX 40 company. We therefore also provide support with an experienced network of lawyers, particularly in the event of a claim.
  • Consideration of the special conditions of national and international market specifics // Adaptation to multi-jurisdictions possible, e.g. if the stock exchange and headquarters are located in different countries and different liability frameworks apply
  • Accepted and jointly developed by leading ECM law firms (especially on the issuer side), auditors and consultants

Professional "lean" process thanks to our specialization:

  • In addition to the streamlined integration of the insurance stream into the project planning, we know the needs of various stakeholders at certain points in the project and prepare you accordingly. We recommend that project managers in particular take advantage of coaching from our company in advance so that they are aware of the pitfalls in the project
  • We clearly state what is required from you or the law firm(s) commissioned for the prospectus with a clear timeline in order to spare your top management's busy time as much as possible. Ideally, the effort will have been built up well in advance, e.g. by building trust in the insurance markets, so that we need even less C-level attention
  • Coaching on liability and, on request, a briefing for your top management before an underwriting call for the best possible marketing on the insurance market

Creativity and
innovations

  • We transfer almost exclusively complex risks: To this end, we are in personal contact with all leading risk carriers in continental Europe on your behalf. We always strive to find innovative solutions that suit your needs.
  • Global Team of Experts: If a project requires it, we can also find the necessary capacities and suitable concepts in London, Bermuda and the USA with our strategic cooperation brokers. In addition to our international network partners, we are also regularly on site to personally market our clients' risks in London and other markets.
  • Our long-standing relationships with insurance partners ensure even more opportunities in marketing and the best results in finding premiums, as we consistently integrate international insurance markets into the tendering process and thus "challenge" offers globally for innovations and premiums

Experienced deal team on every project:

  • We are experts consisting of fully qualified lawyers, business economists and risk managers, so that we meet the challenging discussions with all stakeholders at eye level and also speak their "language". (from investment banks and their law firms, management boards, supervisory boards to auditors)
  • We are owner-managed! You therefore have a high degree of certainty that your contacts will still be at your side even if you move to a new stock market window. An added value that guarantees you stability in an important stream in the personnel carousel in the D&O labor market
  • The deal team has many years of experience from numerous well-known US IPOs of German and European companies from the life sciences, tech and space sectors: ask for our references and we will be happy to put you in touch with the contact persons of our clients themselves.
  • We are familiar with the special pressure and project management of the often tight timelines on projects. We are available at any time during the project, including weekends 
  • Florian has already managed the IPO project for large capital market transactions from an "in-house perspective" of a DAX 40 company and therefore knows first-hand the issues of the supervisory board, as well as the processes between the stakeholders and the preparation of the prospectus
Our services

A holistic approach to risk management

We place identified and insurable risks on the global insurance markets for you in the best possible way. We know that this does not always solve all your challenges. Strong growth can lead to bottlenecks in the insurance department and/or a professionalization of risk management may be necessary. We can help you with this.

For startups, scaleups & life sciences companies

Risk management as a service

It is particularly important for start-ups and pre-IPO companies to develop simple and less complex (risk management) concepts. These must identify, evaluate and transfer the key risks in order to avoid the insolvency of the business model in the worst case scenario.
-> see the Watchmaster case, for example.

From a risk management perspective, it is essential to create a common risk awareness in the first step, which is largely supported by the risk strategy. Convince your investors in the due diligence process of your next financing round with a risk report and a deep understanding of your risks, thereby safeguarding against risks that could threaten your company's existence.

On the basis of sound risk and insurance management, we develop a decision-making basis for your company. You decide what to insure and what not to insure. Because not every risk is worth insuring. Here is our basic approach:

  • Risk identification in joint risk workshops, coupled with our experience in industry-typical risks for life sciences, FinTech, tech companies and venture capital firms
  • Risk analysis and assessment (software supported on request)
  • Development of a joint risk management strategy (Which risks can be accepted, avoided, reduced or transferred?)
  • Determination of your company's risk-bearing capacity and risk acceptance and impact analysis on KPIs in your balance sheet (how much risk can you afford or do you want to take?)
  • Creation of an insurance strategy (what risk should be borne by the company, what should be insured? Goal: Minimization of risk premiums)
  • Implementation and placement of risk and insurance strategies on the insurance market

 

Your added value through active risk and insurance management:

  • Sustainably increase the security level for your company
  • Value-oriented risk management will boost your valuation in the next financing round
  • Significantly reduce your insurance costs
  • Manage and process claims more efficiently
  • CONSCIOUSLY take risks and promote growth!

 

The importance of this for young growth companies was demonstrated not least by the Silicon Valley Bank case, which was identified as part of a risk management process and - if necessary - would have led to an adjustment of the banking/treasury strategy.

From a risk management perspective, it is essential to create a common risk awareness in the first step, which is largely supported by the risk strategy. Convince your investors in the due diligence process of your next financing round with a risk report and a deep understanding of your risks, thereby safeguarding against risks that could threaten your company's existence.

On the basis of sound risk and insurance management, we develop a decision-making basis for your company. You decide what to insure and what not to insure. Because not every risk is worth insuring. Here is our basic approach:

  • Risk identification in joint risk workshops, coupled with our experience in industry-typical risks for life sciences, FinTech, tech companies and venture capital firms
  • Risk analysis and assessment (software supported on request)
  • Development of a joint risk management strategy (Which risks can be accepted, avoided, reduced or transferred?)
  • Determination of your company's risk-bearing capacity and risk acceptance and impact analysis on KPIs in your balance sheet (how much risk can you afford or do you want to take?)
  • Creation of an insurance strategy (what risk should be borne by the company, what should be insured? Goal: Minimization of risk premiums)
  • Implementation and placement of risk and insurance strategies on the insurance market

 

Your added value through active risk and insurance management:

  • Sustainably increase the security level for your company
  • Value-oriented risk management will boost your valuation in the next financing round
  • Significantly reduce your insurance costs
  • Manage and process claims more efficiently
  • CONSCIOUSLY take risks and promote growth!

 

The importance of this for young growth companies was demonstrated not least by the Silicon Valley Bank case, which was identified as part of a risk management process and - if necessary - would have led to an adjustment of the banking/treasury strategy.

For listed corporations and SMEs

Rent-an-Insurance-Manager

We place identified and insurable risks on the global insurance markets for you in the best possible way. We know that this does not always solve all your challenges. Strong growth can lead to bottlenecks in the insurance department and/or a professionalization of risk management may be necessary. We can help you with this.

On the other hand, many companies do not (yet) have an insurance department with their own staff or cannot find suitable personnel. Above a certain size, your industrial risk and insurance issues require professional support to ensure that your investments and strategies are adequately protected. This is where we provide you with support tailored to your needs.

Building up your own staff to deal with your internal insurance issues is time-consuming and cost-intensive. This work is often carried out by the head of finance or legal, for example, but not by professionally trained insurance staff.

Our solution for your company: Rent-an-Insurance-Manager

  • Rent your "own" insurance department for a certain period of the year
  • Simply outsource the management and administration of insurance contracts
  • Reduce costs - increase security

Our "Rent-an-Insurance-Manager" concept allows you to hire core competencies in the field of insurance for a limited period of time and tailored to your needs, as if you had your own staff in place.

As an outsourced insurance department, Risk Partners manages and handles your company's insurance work, e.g. as an in-house contact for insurance issues, an interface to your insurance broker or to your insurers.

Your added value through Rent-an-Insurance-Manager:

  • Efficient use of personnel and costs. Existing processes are optimized while at the same time freeing up your internal resources in their specialist areas (legal/finance)
  • "Bookable on a temporary basis", for example if you have staff shortages during peak periods such as renewals or annual financial statements and need support at short notice
  • Saves time: freed-up capacity can be used in other core areas of your company
  • "Professional sparring" relieves and supports your existing team with a second opinion
  • Professional support for your insurance issues through the use of qualified insurance expertise
  • By increasing the quality of work, you also reduce risks for your management's liability

On the other hand, many companies do not (yet) have an insurance department with their own staff or cannot find suitable personnel. Above a certain size, your industrial risk and insurance issues require professional support to ensure that your investments and strategies are adequately protected. This is where we provide you with support tailored to your needs.

Building up your own staff to deal with your internal insurance issues is time-consuming and cost-intensive. This work is often carried out by the head of finance or legal, for example, but not by professionally trained insurance staff.

Our solution for your company: Rent-an-Insurance-Manager

  • Rent your "own" insurance department for a certain period of the year
  • Simply outsource the management and administration of insurance contracts
  • Reduce costs - increase security

Our "Rent-an-Insurance-Manager" concept allows you to hire core competencies in the field of insurance for a limited period of time and tailored to your needs, as if you had your own staff in place.

As an outsourced insurance department, Risk Partners manages and handles your company's insurance work, e.g. as an in-house contact for insurance issues, an interface to your insurance broker or to your insurers.

Your added value through Rent-an-Insurance-Manager:

  • Efficient use of personnel and costs. Existing processes are optimized while at the same time freeing up your internal resources in their specialist areas (legal/finance)
  • "Bookable on a temporary basis", for example if you have staff shortages during peak periods such as renewals or annual financial statements and need support at short notice
  • Saves time: freed-up capacity can be used in other core areas of your company
  • "Professional sparring" relieves and supports your existing team with a second opinion
  • Professional support for your insurance issues through the use of qualified insurance expertise
  • By increasing the quality of work, you also reduce risks for your management's liability

Benefit from our expert knowledge

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