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📋 '''Share purchase agreement (SPA)''' is the principal legal document governing the acquisition of an insurance company or insurance group through the purchase of its shares, as opposed to an asset purchase. In the insurance sector, the SPA is the cornerstone of virtually every whole-entity transaction — whether a [[Definition:Private equity | private equity]] firm is acquiring a [[Definition:Managing general agent (MGA) | managing general agent]], a global carrier is buying a regional competitor, or an [[Definition:Insurtech | insurtech]] platform is being absorbed by a larger group. Because insurance entities carry complex, long-duration liabilities and operate under stringent [[Definition:Regulatory capital | regulatory capital]] requirements, SPAs in this industry tend to be substantially more detailed than those in other sectors, with specialized provisions addressing [[Definition:Reserves | reserve]] adequacy, [[Definition:Solvency | solvency]] maintenance, and regulatory approval conditions.

⚙️ An insurance SPA typically contains representations and warranties from the seller concerning the target's financial condition, the adequacy of its [[Definition:Loss reserves | loss reserves]], the status of its regulatory licenses, and the validity of its [[Definition:Reinsurance | reinsurance]] arrangements. The buyer will negotiate specific [[Definition:Indemnity | indemnities]] to protect against adverse reserve development — a particularly critical feature when the target writes [[Definition:Long-tail liability | long-tail lines]] such as [[Definition:Casualty insurance | casualty]] or [[Definition:Professional liability insurance | professional liability]]. Completion of the transaction is almost always conditional on obtaining [[Definition:Change of control | change of control]] approvals from relevant insurance regulators, which can span multiple jurisdictions. In the United States, this means navigating the [[Definition:Form A filing | Form A]] process under state insurance holding company acts; in Europe, [[Definition:Solvency II | Solvency II]] supervisors assess whether the proposed new owners meet fit-and-proper and financial soundness requirements. The agreement will also set out the mechanics of a [[Definition:Completion accounts | completion accounts]] or [[Definition:Locked box | locked box]] mechanism to determine the final purchase price, often with adjustments tied to [[Definition:Net asset value (NAV) | net asset value]] or [[Definition:Embedded value | embedded value]] at closing.

💡 The significance of a well-drafted SPA extends far beyond the closing date. Warranty and indemnity provisions may survive for years — sometimes a decade or more for tax and reserve-related claims — creating ongoing obligations between buyer and seller. For insurance transactions, the quality of reserve-related representations is especially consequential: if actual claims development materially exceeds the reserves stated at completion, the buyer's recourse depends almost entirely on the protections negotiated in the SPA. [[Definition:Warranty and indemnity insurance (W&I) | Warranty and indemnity insurance]] has become increasingly common in insurance M&A to backstop these exposures, though underwriters of such policies scrutinize reserve adequacy with particular care. Across markets from London to Singapore, the SPA remains the single most important document shaping the risk allocation between parties in any share-based insurance acquisition.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Mergers and acquisitions (M&A)]]
* [[Definition:Completion accounts]]
* [[Definition:Locked box]]
* [[Definition:Warranty and indemnity insurance (W&I)]]
* [[Definition:Change of control]]
* [[Definition:Shareholder agreement]]
{{Div col end}}

Definition:Share purchase agreement (SPA) - Revision history

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