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📄 '''Draft share purchase agreement (draft SPA)''' is the preliminary version of the principal legal document governing the sale and purchase of equity interests in an insurance or insurance-related business. Whether the target is a [[Definition:Insurance carrier | carrier]], a [[Definition:Managing general agent (MGA) | managing general agent]], a [[Definition:Third-party administrator (TPA) | third-party administrator]], or an [[Definition:Insurtech | insurtech]] platform, the draft SPA serves as the starting point for negotiations between buyer and seller, setting out proposed terms on price, [[Definition:Closing condition | closing conditions]], [[Definition:Representation and warranty | representations and warranties]], [[Definition:Indemnification | indemnification]] provisions, and the mechanics of transferring ownership. In insurance transactions, the draft SPA must also address sector-specific complexities such as regulatory change-of-control approvals, the treatment of [[Definition:Loss reserves | reserves]], and the handling of in-force [[Definition:Policy | policies]].

⚙️ Typically issued by the buyer's legal counsel — or occasionally by the seller's advisors in a competitive auction process — the draft SPA reflects the issuing party's preferred allocation of risk. In insurance deals, the representations section is particularly extensive: sellers are asked to warrant the accuracy of [[Definition:Statutory accounting | statutory financial statements]], the sufficiency of [[Definition:Claims reserves | claims reserves]], compliance with [[Definition:Insurance regulation | regulatory requirements]] across all jurisdictions where the target operates, and the status of [[Definition:Reinsurance | reinsurance]] arrangements. The draft will also propose a framework for [[Definition:Purchase price adjustment | purchase price adjustments]] tied to metrics such as [[Definition:Net asset value (NAV) | net asset value]] or [[Definition:Embedded value | embedded value]] measured at closing. Multiple rounds of mark-ups typically follow, with each party's counsel exchanging revised drafts — a process commonly called "turning the document" — until the parties reach an agreed form suitable for execution.

💡 The strategic significance of the draft SPA in insurance M&A extends beyond its legal content. The document's structure and the aggressiveness of its initial terms signal how the buyer views risk in the target's operations — a heavily caveated [[Definition:Indemnification | indemnification]] section, for instance, may indicate concerns about latent [[Definition:Underwriting | underwriting]] exposures or pending [[Definition:Claims | claims]] litigation. Conversely, a seller-friendly draft in a competitive process can accelerate deal timelines by reducing negotiation friction. Because insurance transactions almost universally require approval from one or more [[Definition:Insurance regulator | insurance regulators]] before closing — a process that can span months in jurisdictions ranging from U.S. state departments of insurance to the Prudential Regulation Authority in the UK or the China Banking and Insurance Regulatory Commission — the draft SPA must anticipate regulatory timelines and build in appropriate conditionality. Getting the draft right early saves significant time and cost downstream.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Share purchase agreement (SPA)]]
* [[Definition:Due diligence report]]
* [[Definition:Closing condition]]
* [[Definition:Representation and warranty]]
* [[Definition:Purchase price adjustment]]
* [[Definition:Regulatory approval]]
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Definition:Draft share purchase agreement (draft SPA) - Revision history

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