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Director - M&A
Aon, St. Louis

Delving Deeper

Andrew Harbut saves money for his private equity clients, as he should, but he also saves it for their acquisition targets.

Harbut helped one private equity client conduct due diligence on a target company that had four marine terminals. He was able to cut 20 percent of the target's premium expense, lower its retention, combine redundant policies and include new perils under the property program as well as new coverages (D&O). While the private equity client chose not to invest in the target company, based on Harbut's work, it did choose Aon to be its broker.

"It reflected well on Andy -- he's a superior broker," the client said. "Leaving one broker relationship for a new one is not easy to do, but they saved the company a lot of money and that was very impressive."

Another private equity client said Harbut not only came through with a cost-effective insurance plan, he went "above and beyond" and helped the target's broker conduct his due diligence to expedite the transaction. The Gores Group LLC in Los Angeles engaged Harbut to perform an overview of the insurance programs of 10 companies it owned and once that analysis was done then selected Aon as its broker.

"Andrew is very proactive, insightful and he thinks outside the box," said Rosy Ku, Gores' director of risk management. "It's very important for a private equity firm to have a broker who really delves into all of the analytical data and asks the right questions, who understands what the firm has to do in order to get the right evaluations of the companies we're looking at."

Senior Vice President
Marsh, New York

Avoiding Turbulence

James Kardaras' expertise in the financial institution bond marketplace pays off for his clients.

One of them had a longstanding incumbent lead primary insurer seeking to end its bond program because the client had recently experienced a very large claim. The price it was currently paying was low compared to its peers and its exposures were increasing due to M&A activity.

However, Kardaras was able to negotiate a renewal of the bond program, not only maintaining the deductible level, but also lowering the primary layer premium and broadening coverage on the primary and all layers of the program to meet the expanding exposure of the client and all of its subsidiaries. He also replaced the incumbent primary lead with a new insurer, obtaining the agreement of the other insurers that had participated on the primary layer along with the former lead, to now follow the much more competitive, aggressive terms of the new lead.

One of his clients was involved in a major acquisition last year, but due to Kardaras, it was a "non-event." "There was no turbulence working with him," the client said. "Additionally, not only has he saved us money and solved some capacity issues through negotiations, he is also an outstanding servicer."

Another client said she has been "very impressed that he has his pulse on the underwriting markets." The client said: "When he says he'll get right back to you, he does. He's very tuned in to the markets and is able to respond on a dime."

Senior Vice President
Marsh, New York

Day One Coverage

Diane Montelione has a knack for navigating complicated deals for her financial industry clients.

One of those clients is a hedge fund that is trading a portfolio of distressed real estate assets. The portfolio was spun off in 2009 from a large investment bank under a 10-year contract.

But the fund began to unwind the deal early, considerably decreasing its exposure and risk profile. Montelione was able to convince insurers to restructure the client's program midterm, which included waiving the change of control provision when one of the founders left. She also revised the list of insured entities post-transaction. That included placing into runoff those that were sold back to the originating bank and arranging outside directorship liability coverage for the client's executives still sitting on the boards of funds that were transferred back to the originating bank.

One of her clients said Montelione has a very good understanding of the firm's business plan and was instrumental in getting it insured on "day one." "Because we have several different businesses that are very complicated, she is able to explain those businesses to different carriers in a way that enables them to understand them, to make sure we have the proper coverage," the client said.

Another client said that even when Montelione is on vacation, she will respond to her requests in less than 12 hours.

"She is very attentive, she is always prepared and at the underwriting markets meeting she asks strategic questions to make sure that we are relayed the pertinent information," the client said.

President, Professional Liability Division
Arthur J. Gallagher & Co., Chicago

Hand-Picked for Success

Phil Norton's technical expertise has saved his clients millions of dollars.

Norton assessed the purchased insurance limits for a major financial services company, the retained risk in the company's captive and the cost of the risk that had been transferred to the reinsurance markets. Norton also analyzed the company's losses over six coverage lines, which included industry benchmarking, a subjective review of industry claims, and the employment of his proprietary model to review the company's loss profile on a coverage-by-coverage basis.

"He did a fabulous job -- we got exactly what we were looking for in both the limits and the pricing analysis," the client said. "The four-pronged approach gave us a range of expected loss and the probable maximum loss, which enabled us to make an informed decision as to how much coverage we should buy and how much we should price both that coverage and the risk we were retaining for our captive."

Norton was able to find another revenue source for ACT Litigation Services, provider of e-discovery litigation support. He convinced Zurich to package and sell ACT's services to Zurich customers.

"Norton understands our business well enough that he not only provides us cost-effective solutions, but he found a way to actually generate revenue for our company -- millions of dollars to ACT's bottom line," said Tom Stevens, the vice president of the company.

Jennifer Rochstein, formerly with ACT, said that Norton was "hand-picked" because of his creative solutions, technical expertise and negotiating prowess, resulting in "excellent and appropriate coverage at a very reasonable price."

Managing Director
Aon, Denver

Hitting the Trifecta

As a former banker, David Payne knows the risks financial institutions can face -- and he has put that expertise to use during the financial crisis.

Community banks in particular are facing a tough insurance climate because of the smaller bank failures that have occurred in the past few years. Threats of litigation from both shareholders and regulators have compelled carriers to take a cautious approach to the sector, resulting in limited and more expensive solutions. Payne has been able to obtain coverage for some of his community bank clients by creating new carrier capacity, especially pertaining to director's and officers' limits focused on providing regulatory coverage.

Payne has also worked with institutions that have entered bankruptcy and has structured global programs for private equity firms. Craig Gross, director of treasury and risk management at American Capital Ltd., a private equity firm and global asset manager based in Bethesda, Md., says that Payne has helped the firm overcome challenges over the past several years by expanding its insurance program.

"He lined up our carriers -- we wanted them in two towers, risks spread across different entities, D&O across three different companies, so it was a real win for us," Gross said.

Aaron Hood, partner at Perella Weinberg Partners LP, said Payne devised new coverage that made better business sense for the New York corporate advisory and asset management services firm.

"We have a high depth of coverage, higher ease of use and a lower premium -- a trifecta," Hood said.

Senior Vice President
Marsh, Hong Kong

An Indemnity Niche

Josh Roach has developed a niche in placing warranty and indemnity insurance for Asian clients.

In 2011 alone, Roach -- Marsh Inc.'s senior vice president, Asia practice leader private equity and M&A services -- utilized the product to facilitate three M&A deals in China, three in Hong Kong, one in Indonesia and two in Singapore.

One of the Singaporean deals involved a private equity fund bidding for hotel assets in Japan from a U.K.-listed entity. At the completion of the deal, the seller intended to distribute 100 percent of the sale proceeds to its shareholders and wind up as soon as possible. The seller did not wish to leave the entity outstanding and looked to minimize liability under the sale and purchase agreement. Roach recognized that a buyer's warranty and indemnity insurance policy would provide the buyer with first party recourse in the event of a loss suffered under the sale and purchase agreement following a breach of seller warranty.

He was able to entice the Pembroke Syndicate at Lloyds to insure its first Asian company, and the coverage is one of the first examples of a warranty and indemnity policy being used for a Japanese target. Because of this policy, the buyer was selected as the winning bidder.

One of Roach's clients said he has received excellent service this year on a warranty and indemnity policy that was put in place by Roach.

Another client said his private equity firm had never had warranty and indemnity insurance before Roach took over the firm's account. Now, Roach helps the client find the "best possible arrangement for the best price."

Managing Director, National EPLI Practice Leader
Aon Financial Services Group
Chicago, IL

Managing Director
Aon Risk Solutions
Philadelphia, PA

Managing Director & Financial Institutions Practice Leader
Aon Risk Solutions
New York, NY

Vice President
Marsh
New York, NY

Executive Vice President
Willis
Boston, MA