b'MERGERS & ACQUISITIONS|PROPERTY-CASUALTY SECTORThe interest in specialty providers over the last yearclose transactions before such changes would come extended to financial buyers as well. In a $561into effect. The notabledeal in this space occurred million all-cash deal, New York-based Towerbrookin December 2021, when Arthur J. Gallagher & Co. Capital Partners L.P. and Further Global Capital(Gallagher) announced that it had completed the Management, L.P. acquired all outstanding commonacquisition of substantially all of the treaty shares of ProSight Global, Inc. (ProSight Global),reinsurance brokerage operations of Willis Towers a New Jersey-based specialty insurer with offeringsWatson PLC (Willis Towers) for $3.25 billion, in the construction, consumer service, marine andfinanced with cash on hand. energy, media and entertainment, professional service, real estate, sports and transportation lines.Regulatory Developments and Novel The investor group, a pair of PE and venture capitalDeal Structures Generate Runoff Buzzfirms focused primarily on middle-market consumer goods and financial services industry acquisitions,2021 was a breakthrough year for the runoff sector saw an opportunity to expand their portfoliosas regulators and insurance industry players alike through this take-private acquisition. began to come to terms with the emerging markets potential for growth. New statutorily created runoff Agent-Broker Consolidation Continuesdeal structures, including the Insurance Business in Response to Seller Tax Concerns Transfer and the Corporate Division (see Insurance RegulatoryUS/NAICInsurance Business As we have reported in prior years, the insuranceTransfers and Corporate Divisions Gather Steam), producer M&A marketplace continues to experienceled the charge toward a new runoff paradigm. consolidation , driven primarily by the expandingFurther, the culmination of several years of interest of PE and other alternative capital backedreinsurance collateral reform efforts between the buyers. S&P Global Market Intelligence projectedUS-EU and the US-UK resulted in a set of National that a record 795 deals involving US-based brokerAssociation of Insurance Commissioners Model Law and agency targets would be completed in 2021, uprevisions that seek to eliminate reinsurance from 636 deals in 2020.collateral requirements and create reciprocal In addition to the continued presence of PE andjurisdictions in which regulatory burdens for alternative capital, a significant driver of agent- operating are lessened. broker consolidation was thought to be sellerIn addition to these state and federal regulatory concerns of forthcoming changes to federal taxdevelopments, the emergence of the runoff sidecar policy. As a new US administration took office inserved as an example of the increased appetite for 2021, speculation ensued of changes to the federaldeal-making in the runoff sector. Early in the year, tax code affecting long-term capital gainsglobal runoff and legacy reinsurance specialist treatment, the establishment of a corporateunderwriter Premia Holdings Ltd. (Premia) alternative minimum tax and proposals for businessannounced the formation of Elevation Re (SPC) Ltd. and individual tax rate hikes, prompting sellers to(Elevation Re), with an initial capitalization of 18|Global Insurance Industry Year in Review 2021'