Research published this week by Tokio Marine HCC suggests that smaller mergers and acquisitions are responsible for the most severe transaction risk insurance losses, challenging the common assumption that modestly sized deals carry lower risk.

The analysis, based on more than 500 claims and payouts exceeding £110m, shows that 80% of TMHCC's largest losses involved transactions with an enterprise value under £200m.

Despite a market trend toward low or zero retentions on smaller deals, TMHCC warns that these transactions still pose meaningful exposure.

The findings also show a shift toward later claims notifications. Historically, claims made more than three years after policy inception represented less than 10% of the total. By 2023 and 2024, these later notifications rose to around 20%. Early claims have declined too, falling from more than 65% of notifications in 2021 to just over 20% in 2024.

Naomi Barnes, senior claims counsel and TRI lead at TMHCC, said: “"Our claims data tells a clear story: deal size is not a reliable proxy for risk. Our experience shows that smaller deals can still produce significant losses. Every M&A transaction, large or small, carries material breach of warranty exposure.”

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