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🤝 '''Share deal''' is an [[Definition:Mergers and acquisitions (M&A) | M&A]] transaction structure in which the buyer acquires the shares — and thereby the ownership — of an [[Definition:Insurance carrier | insurance company]] or other insurance-related entity, rather than purchasing individual assets and liabilities directly. In the insurance sector, this distinction carries outsized significance because an insurance company is not merely a collection of assets: it holds regulatory licenses, [[Definition:Reserves | reserves]], active [[Definition:Insurance policy | policies]], [[Definition:Reinsurance | reinsurance]] contracts, and relationships with [[Definition:Policyholder | policyholders]] and regulators that are difficult or impossible to transfer piecemeal through an [[Definition:Asset deal | asset deal]]. A share deal allows the acquired entity to continue operating as a going concern under its existing legal identity, preserving its licenses, [[Definition:Admitted carrier | admitted status]], and contractual arrangements intact.

🔍 The mechanics of a share deal in insurance involve the buyer purchasing all or a controlling stake of the target company's equity — whether from private owners, public shareholders, or a parent group divesting a subsidiary. Because the buyer inherits the full legal entity, it also assumes all of its obligations, including run-off [[Definition:Loss reserves | loss reserves]], contingent liabilities, pending [[Definition:Litigation | litigation]], and any regulatory undertakings. This comprehensive succession is both the principal advantage and the chief risk of the structure. [[Definition:Due diligence | Due diligence]] in insurance share deals is therefore particularly intensive, focusing on reserve adequacy, the quality of the [[Definition:In-force book | in-force book]], embedded [[Definition:Reinsurance recoverables | reinsurance recoverables]], and any legacy exposures such as [[Definition:Asbestos and environmental (A&E) | asbestos or environmental]] liabilities. Regulatory approval is typically required from insurance supervisors in each jurisdiction where the target holds a license — for example, the [[Definition:National Association of Insurance Commissioners (NAIC) | NAIC]] framework in the United States imposes change-of-control review thresholds, while [[Definition:Solvency II | Solvency II]] jurisdictions require notification and approval from the relevant national competent authority.

💡 Share deals dominate insurance M&A for practical reasons that go beyond regulatory convenience. Transferring an insurance entity's licenses, [[Definition:Policy | policy]] obligations, and [[Definition:Reinsurance treaty | reinsurance treaties]] individually through an asset deal would require consent from counterparties, reissuance of policies, and fresh regulatory applications — a process so cumbersome as to be impractical in most cases. The structure also preserves the target's [[Definition:Tax attributes | tax attributes]], historical [[Definition:Loss experience | loss experience]] used for [[Definition:Pricing | pricing]], and established [[Definition:Credit rating | credit ratings]]. However, buyers must price in the risk of undisclosed or under-reserved liabilities, which is why insurance share deals frequently include mechanisms such as [[Definition:Loss portfolio transfer (LPT) | loss portfolio transfers]], indemnity clauses, or [[Definition:Earn-out | earn-out]] provisions linked to the future development of reserves. The tension between the operational simplicity of buying the whole entity and the risk of inheriting its full history defines much of the negotiation dynamic in insurance transactions worldwide.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Asset deal]]
* [[Definition:Mergers and acquisitions (M&A)]]
* [[Definition:Due diligence]]
* [[Definition:Change of control]]
* [[Definition:Loss portfolio transfer (LPT)]]
* [[Definition:Run-off]]
{{Div col end}}

Definition:Share deal - Revision history

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