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📨 '''Indication of interest (IOI)''' is a preliminary, typically non-binding expression from a prospective buyer or investor signaling willingness to pursue an insurance-related transaction at an approximate valuation range or under specified terms. In the insurance and [[Definition:Insurtech | insurtech]] sectors, IOIs frequently surface during the sale of an [[Definition:Insurance carrier | insurance company]], a [[Definition:Book of business | book of business]], an [[Definition:Managing general agent (MGA) | MGA]] platform, or a block of in-force [[Definition:Insurance policy | policies]] in a [[Definition:Loss portfolio transfer (LPT) | loss portfolio transfer]]. The IOI serves as an early filter in the deal process, enabling the seller and its advisors to gauge market appetite and narrow the field of potential counterparties before granting access to more sensitive operational and financial data.

📋 The typical sequence begins with the seller or its [[Definition:Investment bank | investment bank]] distributing a high-level overview — often called a teaser or [[Definition:Information memorandum | information memorandum]] summary — to a curated list of potential acquirers, including [[Definition:Private equity | private equity]] firms, strategic carriers, and [[Definition:Reinsurance | reinsurers]]. Interested parties then submit IOIs that outline a preliminary valuation, the proposed transaction structure, key assumptions about [[Definition:Reserves | reserves]] and [[Definition:Embedded value | embedded value]], anticipated [[Definition:Due diligence | due diligence]] requirements, and any regulatory conditions such as obtaining [[Definition:Change of control | change of control]] approvals from state insurance departments, the [[Definition:Prudential Regulation Authority (PRA) | PRA]], or other supervisory bodies. Because the IOI is non-binding, the figures presented typically reflect a range rather than a firm price, and they may be conditioned on actuarial review of [[Definition:Loss reserves | loss reserves]], verification of [[Definition:Combined ratio | combined ratios]], and assessment of [[Definition:Regulatory capital | capital adequacy]]. Sellers use the collected IOIs to create a shortlist of parties invited into the next phase, which usually involves access to a virtual data room and deeper diligence.

🎯 While non-binding in nature, the IOI carries real strategic weight. For sellers of insurance businesses, the quality and credibility of IOIs received early in the process often shape whether to pursue a broad [[Definition:Auction | auction]] or a negotiated deal with a single preferred bidder. An IOI that demonstrates a sophisticated understanding of the target's [[Definition:Underwriting | underwriting]] portfolio, regulatory environment, and capital structure signals a serious buyer likely to close — and gives the seller confidence to invest time in a deeper engagement. Conversely, vague or unrealistically high IOIs can be a red flag for parties unlikely to sustain their pricing through full diligence. In [[Definition:Run-off | run-off]] and legacy transactions, where reserve uncertainty is elevated, IOIs often include explicit assumptions about [[Definition:Loss development | loss development]] that become critical reference points as the deal progresses toward a binding [[Definition:Indicative offer | indicative offer]] and ultimately a definitive agreement.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Indicative offer]]
* [[Definition:Information memorandum]]
* [[Definition:Due diligence]]
* [[Definition:Letter of intent (LOI)]]
* [[Definition:Loss portfolio transfer (LPT)]]
* [[Definition:Book of business]]
{{Div col end}}

Definition:Indication of interest (IOI) - Revision history

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