Insurance Sector Transactions To Face Increased Scrutiny
A look at how certain U.S. insurance sector transactions—which may be seen more frequently due to the current macroeconomic environment—may trigger a review by the Committee on Foreign Investment in the United States.
November 19, 2020 at 10:00 AM
8 minute read
The U.S. government has expanded the authority of the Committee on Foreign Investment in the United States (CFIUS) to review and address national security risks posed by inbound acquisitions and investment. It may be surprising to learn that the U.S. government considers insurance companies as presenting national security risks and that insurance sector transactions may fall within CFIUS's jurisdiction.
In recent years, several insurance-related transactions have faced CFIUS scrutiny and were required to accept CFIUS conditions in order to be completed. Insurance sector professionals should recognize CFIUS risk to their transactions, particularly given the demonstrated national security focus on transactions involving sensitive data on U.S. persons, critical technology, and important U.S. infrastructure or real estate.
New regulations under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) are intended to address these concerns by increasing CFIUS's authority to review a broader range of transactions, including non-controlling investments in U.S. businesses and real estate transactions. These regulations may also subject the disposition of distressed assets, bankruptcy proceedings, and convertible debt transactions to CFIUS review.
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