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🔄 '''Post-closing true-up''' refers to the financial reconciliation that occurs after the closing of an [[Definition:Mergers and acquisitions (M&A) | insurance M&A]] transaction to align the purchase price with the verified financial condition of the acquired entity as of the closing date. While the term is often used interchangeably with [[Definition:Post-closing adjustment | post-closing adjustment]], "true-up" carries a specific connotation of correcting preliminary figures to their final, accurate values — truing up estimates to reality. In insurance transactions, the true-up process is especially important because the assets and liabilities of an [[Definition:Insurance carrier | insurance carrier]] or [[Definition:Reinsurance | reinsurer]] — including [[Definition:Loss reserves | loss reserves]], [[Definition:Deferred acquisition costs | deferred acquisition costs]], and [[Definition:Investment portfolio | investment portfolio]] valuations — are subject to estimation uncertainty that can only be resolved with post-closing data.

📐 The true-up process follows a sequence defined in the [[Definition:Share purchase agreement (SPA) | purchase agreement]]. At closing, the parties use estimated figures — sometimes drawn from a recent monthly or quarterly close — to calculate a provisional purchase price. After closing, typically within 60 to 120 days, the buyer prepares a [[Definition:Post-closing adjustment statement | closing statement]] reflecting actual figures as of the closing date using the agreed-upon accounting policies. Where the actual [[Definition:Net asset value (NAV) | net asset value]] or other reference metric differs from the estimate, a cash payment flows between the parties to true up the price. In insurance, the true-up may encompass the recalculation of [[Definition:Statutory capital | statutory capital]] and surplus, [[Definition:Incurred but not reported (IBNR) | IBNR]] reserves, [[Definition:Premium receivable | premium receivables]], and any [[Definition:Reinsurance recoverable | reinsurance recoverables]]. Depending on the jurisdiction and the regulatory framework — [[Definition:Solvency II | Solvency II]] in Europe, [[Definition:Risk-based capital (RBC) | risk-based capital]] in the U.S., or [[Definition:C-ROSS | C-ROSS]] in China — the applicable measurement basis can materially influence the outcome.

✅ A well-designed true-up mechanism protects both parties from the inherent timing mismatch in insurance transactions: sellers want to be paid fairly for what they delivered, and buyers want assurance that they are not overpaying for a balance sheet that deteriorated between the last reporting date and closing. Disputes over the true-up are among the most common sources of post-deal contention in the insurance sector, particularly when long-tail lines such as [[Definition:Workers' compensation insurance | workers' compensation]] or [[Definition:Professional liability insurance | professional liability]] are involved, where reserve movements can be significant. Experienced deal teams invest considerable effort in specifying the true-up methodology with precision — including worked examples, defined accounting hierarchies, and dispute resolution procedures — to minimize the risk of costly arbitration after the handshake.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Post-closing adjustment]]
* [[Definition:Post-closing adjustment statement]]
* [[Definition:Completion accounts]]
* [[Definition:Pre-closing price adjustment]]
* [[Definition:Net asset value (NAV)]]
* [[Definition:Working capital]]
{{Div col end}}

Definition:Post-closing true-up - Revision history

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