Beazley PLC on Tuesday launched a range of directors and officers liability coverages for special purpose acquisition companies.
A spokeswoman for the London-based insurer said in an email that Beazley would offer Side A, B and C coverage – which could cover individuals or corporate entities involved with SPACs – and would typically offer limits of $2.5 million or $5 million.
“These are bespoke policies designed for the unique characteristics of a SPAC to provide a simplified contract with clean, clear wordings and fewer endorsements,” the email said.
SPACs, which are sometimes called blank-check companies, have seen a surge in popularity over the past year. A wide variety of companies have used the structures as a means of going public without going through a traditional initial public offering.
Beazley will offer up to 24-month initial policy terms “designed to cover the typical life cycle of a SPAC,” the spokeswoman said, and the coverage is noncancellable by either party.
While SPACs are often viewed as a quicker and more efficient means of raising funds than an IPO, the Securities and Exchange Commission issued an investors bulletin on SPACs in December warning that the economic interests of a SPAC’s management team and directors and officers “often differ from the economic interests of public shareholders.” Several SPAC-related shareholder lawsuits have already been filed.
Source: Business Insurance – Beazley launches specialty D&O coverage for SPACs