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Tokio Marine HCC (TMHCC), based in Houston, Texas, has today published findings that challenge a widespread market perception that small-to-medium size mergers and acquisitions (M&A) transactions represent lower risk for transaction risk insurance (TRI) carriers.
Following TMHCC’s initial TRI Claims report published in 2023, the 2025 report, which analyses over 500 claims and payouts amounting to more than US$140m, indicates that 80% of its most severe losses stem from transactions with an enterprise value of less than US$250m.
While carriers increasingly offer low or even zero retentions on policies for smaller deals, TMHCC’s claims experience points to meaningful risk from these transactions, demonstrating the need for careful underwriting and risk assessment, regardless of deal size.
"Our claims data tells a clear story: deal size is not a reliable proxy for risk," said Naomi Barnes, Senior Claims Counsel and TRI Lead at TMHCC. "Our experience shows that smaller deals can still produce significant losses. Every M&A transaction, large or small, carries material breach of warranty exposure.”
Another key trend emerging from the report is the shift toward later claims notifications. TMHCC data shows that, historically, claims notified after more than three years since policy inception accounted for less than 10% of the total claims received, with some years recording none at all. By contrast, in 2023 and 2024, claims notified after three years made up around 20% of the total.
This trend is further underscored when looking at claims made within the first year of policy inception. In 2021, early notifications accounted for over 65% of all claims, but by 2024, this fell to a little over 20%, a clear indicator of a move toward later reporting.
The report highlights several factors that could be driving this shift. As the TRI market matures, both insureds and broker teams are becoming more familiar with these policies, meaning their knowledge of the cover and how it is applied is becoming stronger. The widespread adoption of three-year general warranty periods could also be facilitating later notifications. Economic uncertainty and heightened regulatory scrutiny may further contribute to this trend, since the resulting deal environment can place additional pressure on representations and warranties given, creating more triggers for claims.
Carlos Fane, Claims Manager, TMHCC concludes that "the market is maturing in unexpected ways. As buyers, sellers and brokers become more sophisticated in understanding TRI coverage, we're seeing claims emerge later in the policy lifecycle. This has important implications for how the market prices risk and structures policies going forward."
The publication of TMHCC’s TRI Claims Report 2025 comes at a time when global M&A activity continues to be heavily influenced by a complex mix of economic and geopolitical pressures. A more uncertain business environment underscores the need to have cover that maintains confidence and ensures that transactions that might otherwise be delayed or abandoned entirely can proceed.
Despite these difficulties, M&A deal values showed resilience in 2024. According to figures from Bain & Company, Global M&A deal value was up by 15% at the start of December 2024, while global M&A deal volume reversed its two-year decline and was up 7% year-to-date. 1
Tokio Marine HCC is a trusted provider of transaction risk insurance, delivering Warranty & Indemnity (W&I) cover since 2010, and Representations & Warranties (R&W) cover in North America since 2017, as well as Contingent Risk Transfer and Tax Indemnity insurance since 2023. Its team develops innovative TRI solutions to support M&A deals worldwide.
Mergers, acquisitions and disposals are a necessary part of corporate dynamics. However, each one presents a completely new and unique set of risk issues for companies to consider.
