Taussig Capital, an advisory firm focused on asset managers, family offices, insurers, reinsurers, and banks, is to launch a Directors and Officers (D&O) insurance product geared towards Special Purpose Acquisition Companies (SPACs).
A SPAC is a company that has no commercial operations and is formed strictly to raise capital.
Taussig Capital CEO Joseph Taussig explained how the firm had been noticing D&O insurance premiums for some SPACs increase more than 10-fold in the last year and those premiums can be as much as 50% of the expected expenses of the SPAC prior to an acquisition.
“We have analyzed this situation and have concluded that this is a serious mispricing of risk,” he said.
“As such, we have written a white paper detailing different solutions for SPACs looking to lower D&O insurance premiums, lower deductibles, and/or access higher policy limits than the current markets offer.
“Furthermore, we have identified various ways for sponsors to participate in the underwriting profits that may result from these solutions when there are no losses against a policy.”
Taussig detailed further plans to build the infrastructure capable of benefitting the entire panoply of SPACs as outlined in the white paper.
“In the meantime, we have a facility that can immediately benefit sponsors of multiple SPACs and are already in discussions with some of them,” he concluded.
The firm recently acquired Spencer Re I.I., with the intention of rebranding as Taussig Capital Re.
Following the acquisition and rebranding, Taussig Capital Re will offer reinsurance to both primary insurers and traditional reinsurers looking to optimize their programmes and access non-traditional sources of insurance capital.
