Our multidisciplinary teams assist legal departments in the insurance industry as they react to rapidly changing conditions and as they create such change via transactions large and small.
Design and Execution of Transactions
The breadth of the Crowell & Moring corporate practice for insurers extends to all segments of the industry, virtually all transaction types, and all of the major corporate organizational issues that insurers face. Our deal lawyers have helped navigate transactions of every kind to conclusion, from mergers and acquisitions to corporate reorganizations and redomestications. Our corporate/transactional practitioners work with large international and domestic public companies, midsize and emerging businesses, privately held firms, private equity sponsors and hedge funds, investment firms, and high net worth individuals across a wide range of industries. And our corporate and insurance lawyers regularly advise insurance clients interested in efficient and effective organizational structures, state-of-the-art contract and policy language, the creation and legally compliant management of captives and other risk-sharing vehicles, and entry into new geographic and product markets.
For transactions, we deploy experience from all of the disciplines relevant to a given deal. Although our transactional teams have extensive experience on behalf of the insurance industry, we couple that knowledge with specific experience that is "industry-agnostic" whenever necessary. Our transactional practice has historically had a specific focus on M&A, private equity, venture capital raising, access to capital markets in all its forms, joint ventures, and a wide variety of investment vehicles. For insurers in particular, our lawyers have efficiently executed transactions running the gamut: domestic and cross-border M&A, joint ventures, purchases and sales of renewal rights, issuance of debt, creation and licensing of new subsidiaries, and creation and proper management of runoff entities, including the purchase or sale of those entities.
We staff transactions from our Washington, D.C., New York, and California offices, as circumstances may require. Where a transaction requires substantial or special insurance-related due diligence, as with most M&A and nearly all transactions involving runoffs, we rely on our insurance and reinsurance litigators to provide hands-on, substantively sophisticated assessments. Our competition/antitrust group, located primarily in Washington, D.C., consults whenever necessary.
In the international arena, Crowell & Moring offers a unique suite of services designed to provide full support for companies seeking to enter new geographic markets or to manage their exposures and regulatory risks in foreign venues. We combine our international trade legal practice with the experience of our colleagues at C&M International, our regulatory and public policy consulting affiliate. This array of disciplines—involving the practice of law and the art of international relations—is in turn combined with our traditional strengths in insurance advisory services. The result, we believe, is unsurpassed depth and sophistication for clients seeking practical advice about how to approach new international markets.
Corporate Advisory Services; Product Development
But there is far more to a corporate practice for insurers than just transactions. Our lawyers are continuously collaborating with insurers about the corporate and insurance issues "du jour," which are always abundant, complicated, and critically important. Our insurance lawyers craft policy language for new products and manuscript arrangements, advise clients about legal developments as they arise, connect emerging developments in the tort system to policy language and vice versa, and assist insurance clients with managing the risks of change in the legal environment generally. Our experience allows us to connect all of the different strands of a situation together—legal, regulatory, political, contractual, and cultural—to find solutions that work in the context of a given insurance business's operations.
Our advisory work has also extended to corporate organizational issues, including advice about the corporate veil, preservation of the attorney-client privilege, and the best options for organizing legal departments, compliance operations, and the interrelationship between the legal and claims departments. We approach these matters from a position of both knowledge and experience: deep knowledge of the relevant legal principles combined with an understanding of corporate and legal organizations as well as human nature. We believe that legal and compliance operations must be both comfortably embedded in their businesses and sufficiently independent to do their jobs effectively. Choices about organizational structure set the stage for success or failure of what are often very expensive undertakings in and of themselves—undertakings that also plainly implicate the efficiency and productivity of a wide range of business practices throughout a company.
Our corporate advisory work is both domestic and global, and it is both strategic and highly tactical. To be effective, strategic insight requires consistent execution. Conversely, action plans taken without a strong and sophisticated strategic sensibility too often lead to inefficiency and ineffectuality. Our collective experience allows us to couple strategic coherence with practical business and organizational know-how developed over several decades representing all segments of the insurance industry. The result, we think, is integrated advice that offers a proper balance between the conceptual and the practical and that manages risks while not destroying rewards.
Our regulatory advisory services for the insurance industry form a part of the long tradition at Crowell & Moring that strives to assist insurance clients in satisfying the often dizzying array of commercial rules imposed by courts, legislators, and regulators around the world. For the insurance industry specifically—especially the multinationals—such regulation is often intense, contradictory, and politically or culturally charged. We can help clients navigate compliance with these regimes, particularly when (as seems to happen every week or so) regulations, interpretations, or enforcement philosophies suddenly change.
Regulatory Relations and Compliance
Regulatory interventions are a fact of life in the insurance industry—much more so than in most industries. We help companies design solutions to regulatory interventions into ongoing business practices, and we help create compliance systems that reduce the risks of such interventions without doing violence to business models.
This begins with compliance architecture, which in turn must be premised on a solid understanding of the law and more than an intuitive sense of the regulators’ enforcement intentions. Given the complexity of modern financial regulation, an understanding of regulatory and prosecutorial discretion is central to building the right systems. Indeed, many of the more intrusive regulatory regimes (e.g., FCPA) have within them "safe harbors" for companies that have the right compliance architecture but nevertheless endure some form of misconduct.
Compliance architecture also depends on the nature of the businesses and processes that must be compliant. But compliance is like the scaffolding on a building; it is not the building itself. Therefore, compliance systems must be carefully crafted to operate both within and without the relevant businesses, must be both facilitative and independent, and must operate without unnecessary infliction of inefficiency. Our knowledge of the insurance industry has helped us to advise clients facing these seeming paradoxes about how best to act. Our lawyers have acted as legal counsel to compliance architecture projects and have also supervised the building of entire compliance systems. Our experience extends to all of the major extraterritorial regimes and to traditional insurance regulations issued by states and countries. It extends to all segments of the insurance industry and to all of the parts of those businesses—financial reporting, market conduct, and claims operations.
Sadly, no compliance system is fail-safe, and we are almost continuously representing insurance industry clients facing scrutiny by regulators of every kind. Our lawyers appear before the state insurance regulators, the courts, and often internationally in order to defend insurers against misguided allegations and to resolve regulatory concerns about employee behavior, selling practices, financial reporting (be it under statutory accounting or GAAP), and other matters. We approach such regulatory litigation by organizing teams with the specific regulatory experience necessary as well as the strategic and tactical sensibilities necessary for effective litigation.
We approach all of these legal/organizational problems with an eye toward efficacy as well as efficiency, understanding that dogmatic solutions are rarely actually solutions. Our lawyers have helped to construct sensible, balanced legal and compliance organizations, and we have done this on an international plane as well as a domestic one.
- Mergers and Acquisitions and Other Business Dispositions. We regularly represent companies across the spectrum in all aspects of M&A transactions through thoughtful and practical business-driven advice. We have represented insurers in acquisitions and divestitures of insurance plans in various states, sales of specific lines of business, and whole company transactions. This includes nine- and ten-figure acquisitions of domestic and foreign insurance companies operating in the property-casualty, life, and health segments.
- Disposition of Legacy Liabilities. Our lawyers have had vast experience with transactional solutions to legacy liability problems. We have advised large insurers about the creation of effective liability-limiting structures for legacy liabilities such as asbestos and environmental claims. Our lawyers have advised about the creation and reorganization of runoff entities, including the reorganization of one of the world’s largest runoff entities and the disposition of entities within it. Our experience extends to the proper negotiation and documentation of transactions, insurance litigation due diligence and reserve evaluation, and presentation to regulators and deal defense in public hearings.
- Capital Markets and Commercial Finance and Lending Transactions. We advise on a range of investment transactions, including initial public offerings (IPO) and other registered and underwritten public offerings, private placements, Regulation S offshore offerings, and Rule 144A resale transactions. Our borrower clients are active in a broad spectrum of industries and range from large, publicly traded and privately held portfolio corporations to smaller, closely held and family-owned companies and to startup enterprises. Our lender clients have included insurers, federal and state chartered banks, investment banks, commercial finance companies, opportunity funds, hedge funds, investment groups, and individual investors. We have also executed life securitization transactions and the full range of transactions for the health insurance industry.
- Insurance, Corporate, and Organizational Counseling. Our lawyers have extensive advisory experience in a wide variety of corporate governance issues, including financial reporting; board fiduciary duties; board and committee composition, structure, and processes; conduct of board, committee, and shareholder meetings; business ethics and conflict of interest policies; and corporate social responsibility. In addition, we regularly advise boards of directors, independent directors, and special committees on matters of significant importance to the company. For insurers in particular, our lengthy experience with the industry allows us to provide sound and practical advice concerning corporate structure, managerial structure, and the various issues facing general counsels of international insurers seeking to create effective reporting lines within their legal departments. Our lawyers are also continuously involved in advising insurer and reinsurer clients about policy wordings and filings, new insurance products, and large individual insurance transactions.
- Compliance and Regulatory Counseling. Our lawyers have crafted compliance systems and practices for major insurers, including appropriate organizational structures suited to the demands of the business being addressed. We have regularly defended business practices in regulatory proceedings, whether by defending the practices or by placing them within a more secure and compliant framework. Our lawyers have advised on all of the major regulatory changes since the financial crisis, including groupwide supervision, SIFI, capital requirements, reinsurance collateral and inter-regulator reciprocity, and the trend toward neuroscience-based market and marketing restrictions. And we regularly advise clients within and without the insurance industry about compliance with the major extraterritorial regulatory regimes such as FCPA, AML, and anti-bribery regulations.