Practice Areas & Industries: Sullivan & Cromwell LLP

Practice/Industry Group Overview

Sullivan & Cromwell provides dedicated insurance expertise in corporate, M&A, capital markets, private equity, risk transfer, insurance regulatory, tax and litigation matters to some of the largest U.S. and non-U.S. insurance and reinsurance companies and intermediaries. The Firm represents and has broad transactional experience involving life, property/casualty, health and managed care, financial guaranty and other specialty line and multiline companies, as well as agents, brokers and reinsurance intermediaries, and has in-depth expertise in, among other things:

• Mergers, acquisitions and other change-of-control transactions, including the insurance regulatory approvals and filings incident thereto
• Financings and related disclosure requirements
• Regulatory investigations
• Offshore insurers and reinsurers
• Reinsurance transactions
• Insurance derivatives, insurance risk securitization, transformer vehicles and captives
• Demutualizations and mutual holding company structures
• Sarbanes-Oxley disclosure and corporate governance matters
• Gramm-Leach-Bliley, consolidation of financial services activities and regulation, and permitted insurance activities of banks
• Antitrust and the McCarran-Ferguson Act
• The Terrorism Risk Insurance Act of 2002
• U.S. taxation of insurance companies
• European Union matters.

The Firm also advises on major policy coverage issues, particularly with respect to environmental and product liability coverages, and provides litigation expertise involving insurance and reinsurance coverage and claims matters and other disputes.

The Firm deals on a frequent basis with insurance departments in New York and other states, as well as foreign regulators.

Practice Contacts

Robert G. DeLaMater
New York
P +1-212-558-4788
F +1-212-558-3588
delamaterr@sullcrom.com

Andrew S. Rowen
New York
P +1-212-558-3896
F +1-212-558-3588
rowena@sullcrom.com

William D. Torchiana
Paris, New York
P +33-1-7304-5890
F +33-1-7304-1010
torchianaw@sullcrom.com

Services Available

Insurance Financings

Sullivan & Cromwell's leading insurance finance practice has involved work on many high-profile capital markets transactions for insurance and reinsurance companies of all types over the last 15 years.

S&C has represented insurers, selling shareholders and their financial advisors in a broad array of capital-raising matters, including IPOs, privatizations, demutualizations, spin-offs, stock exchange listings, hybrid offerings, debt offerings, securitizations, preferred securities and surplus notes offerings.

Significant equity offerings include representing: Paris Re Holdings in its Rule 144A/Reg S IPO (2007); IPC Holdings in the secondary sale by AIG of its ownership (2004); Ping An Insurance (Group), Ltd. in its global offering of shares and ADS and IPO in China (2004); Allianz in the U.S. and international aspects of its rights offering (2003); St. Paul/Platinum in the IPO divestiture of St. Paul's reinsurance operations (2002); Prudential in the IPO of common stock and equity units in connection with its demutualization and private placement of Class B stock relating to closed block (1998-2001); Allianz AG in its U.S. registration and NYSE listing (2000); ING Group in its U.S.-registered public share offering and related NYSE listing (1997); and INA in its privatization by the Italian government (1994).

Other equity and debt offering highlights over the past five years include:

Equity and Debt Issuer

2007

• American International Group - Rule 144A debt and SEC-registered global debt and hybrid offerings
• ING Groep - SEC-registered hybrid offerings
• Willis Group Holdings - SEC-registered senior notes offering

2006

• Allied World Assurance Company Holdings - represented AIG, one of the initial investors in Allied World, in connection with IPO
• American International Group - 144A/Reg S senior unsecured notes offerings
• ING Verzekeringen -144A extendible floating rate notes
• PMI Group - SEC-registered debt offering
• Protective Life - SEC-registered hybrid offering

2005

• American International Group - 144A/Reg S senior unsecured notes offering
• IPC Holdings - SEC-registered common and preferred shares offering
• Willis Group Holdings - SEC-registered common stock offering
• Willis Group Holdings - SEC-registered senior notes offering

2004

• Prudential Financial - remarketing of debentures constituting part of equity security units and financing program
• UnumProvident - private placement of equity security units

2003

• Prudential Financial - shelf registration and other financing programs

2002

• SCOR - French and international rights offering
• St. Paul - common stock and equity unit offerings

Equity and Debt Underwriters

2007

• Delphi Financial Group - SEC-registered hybrid offering
• Everest Reinsurance Holdings - SEC-registered hybrid offering
• Health Net - SEC-registered debt offerings
• Lincoln National - SEC-registered debt and hybrid offerings
• The Progressive Corporation - SEC-registered hybrid offering
• UnumProvident - SEC-registered debt offering

2006

• Aetna Inc. - SEC-registered unsecured senior notes offering
• AXA - international rights offering pursuant to Reg S as part of financing for acquisition of Winterthur
• Lincoln National - SEC-registered senior notes offering and SEC-registered hybrid offering
• UnumProvident - SEC-registered remarketing of split-rated senior notes

2005

• AmerUS Group Co. - SEC-registered non-cumulative perpetual preferred shares offering
• AmerUS Group Co.- SEC-registered notes offering
• Everest Re Group - SEC-registered common stock offering
• Principal Financial Group - SEC-registered perpetual preferred stock offerings
• Scottish Re Group Limited - SEC-registered perpetual preferred shares offering

2004

• Anthem - remarketing of debentures constituting part of equity security units
• Cathay Financial Holding Company - Reg S global depositary shares
• Catlin Group Limited - IPO (Rule 144A)
• Everest Reinsurance Holdings - SEC-registered notes offering
• Jefferson-Pilot - 144A debt offerings
• Lincoln National Corporation - SEC-registered debt offering
• MONY Holding - 144A closed block debt securitization
• Oil Casualty Insurance Ltd. - 144A debentures offering
• The Penn Mutual Life Insurance Company - 144A debt offering

2003

• Americo Life -144A/Reg S notes
• Cathay Financial Holding Company - Rule 144A/Reg S global depositary shares
• Everest Re - SEC-registered shares
• Fidelity National Financial, Inc. - SEC registered debt offering
• New York Life - 144A surplus notes offering
• NLV Financial - 144A notes offering
• Oil Insurance Ltd. -144A debentures offering
• St. Paul Companies - SEC-registered debt offering
• Taiyo Life - IPO (Rule 144A)
• UnumProvident - equity and capital securities offerings

2002

• Daido Life - demutualization and IPO (Rule 144A)
• Erie Indemnity - SEC registered common stock offering
• Everest Re - SEC-registered common stock offering
• MONY - 144A closed block debt securitization

Insurance M&A

Sullivan & Cromwell is actively involved in M&A and other strategic transactions involving insurance companies. The Firm ranked first by dollar value in insurance M&A transactions for the first three quarters of 2007 (SNL).

Our clients have been acquirors or targets in:

• cross-border transactions designed to establish or grow international capabilities: AXA in its acquisition of Winterthur (2006); John Hancock in its merger with Manulife Financial (2004); Dexia in its acquisition of FSA (2000); and ING in its acquisitions of Reliastar (2000), Aetna's financial services business (2000) and Equitable of Iowa (1997);
• transactions designed to achieve scale and increase market penetration: Ohio Casualty in its acquisition by Liberty Mutual Group (2007); UnitedHealth Group in its acquisition of John Deere Health Care (2006); Prudential in its acquisitions of Allstate Financial's annuity business (2006), CIGNA's retirement and investment services business (2004) and Skandia's U.S. operations (2003); Mitsui Marine in its merger with Sumitomo Marine (2001); AIG in its acquisitions of Hartford Steam Boiler (2000), Sun America (1998) and 20th Century Industries (2007 and 1998); Provident in its combination with UNUM (1999); The St. Paul Companies in its acquisition of USF&G (1998); and Johnson & Higgins in its combination with Marsh & McLennan (1997);
• combinations between traditional industry leaders: Anthem in its combination with WellPoint (2004); Oxford Health in its combination with UnitedHealth Group (2004);
• cross-industry transactions or spin-offs: Goldman Sachs Group in its acquisition of the variable annuity and variable life insurance businesses of Allmerica (2005); Royal Bank of Canada in its acquisition of Business Men's Assurance from Generali (2003); Allianz in its acquisitions of Nicholas-Applegate (2001) and Pimco (2000); and Allstate in its spin-off by Sears (1994); and
• private equity transactions: Lightyear Capital's establishment of a Lloyd's syndicate to acquire the London market insurance portfolio of Württ AG (2007), and its purchases of Sirius America Insurance from White Mountains Insurance Group (2006) and NAU Country Insurance from its founders (2005); AXA in its sale of AXA RE to a private equity consortium led by Stone Point Capital (2006); Morgan Stanley Principal Investments in its acquisition, together with Apax Partners, of Hub International (2007); Goldman Sachs-affiliated funds in an investment in UICI (2006) and a pre-demutualization investment in MONY (1998).

Other M&A highlights over the past five years include:

2007

• Allianz - U.S. aspects of tender offer for minority interests in AGF (France)
• UnitedHealth Group - pending acquisition of Sierra Health Services

2006

• UnitedHealth Group - acquisition by subsidiary UnitedHealthcare of Arnett HealthSystem subsidiary Arnett Health Plans

2005

• Allianz - U.S. aspects of acquisition of minority interests in RAS
• SCOR - acquisition of remaining 46.65% interest in Irish Reinsurance Partners

2004

• Goldman Sachs Funds - acquisition of MONY by AXA Financial
• Royal Bank of Canada - sale of Liberty Insurance Services Corporation to IBM Corporation

2003-04

• Folksamerica - acquisition of Sierra Insurance Group

2003

• The PMI Group- acquisition by an investment group of General Electric's FGIC
• SCOR - proposed sale of Commercial Risk Partners

2002

• Anthem - acquisition of Trigon Healthcare
• SCOR - sale of 35% interest in COFACE to Natexis Banque Populaires and sale of Fulcrum Insurance Co. to Argonaut Group Inc.

2001

• Allianz - acquisition of Nicholas-Applegate
• Allianz - U.S. aspects of acquisition of Dresdner Bank
• ING - sale of its U.S. based investment banking operations to ABN-AMRO
• Mitsui Marine - merger with Sumitomo Marine
• SCOR - acquisition of Sorema from GROUPAMA
• St. Paul - sale of Fidelity and Guaranty Life to Old Mutual and acquisition of London Guarantee Insurance Company

Mutual and Other Non-Stock Companies

Sullivan & Cromwell's insurance practice includes extensive experience in transactional work involving mutual and other non-stock companies. Over the last decade, we have represented life, health and other insurers and their advisors in demutualizations, conversions, mergers and financings, including surplus note offerings.

Highlights include representation of:

• Premera Blue Cross Blue Shield - in connection with its proposed conversion to a for-profit stock corporation and related IPO (2001-2004)
• Underwriters and financial advisors in connection with proposed conversion/IPO transactions involving Blue Cross Blue Shield entities in North Carolina and New Jersey (2001-2003)
• Underwriters in connection with demutualization IPO of Taiyo Life (2003)
• Underwriters in connection in with demutualization IPO of Daido Life (2002)
• Prudential - in connection with its demutualization, IPO and related transactions (1998-2001)
• Anthem Insurance - represented the financial advisor in connection with Anthem's demutualization and represented the underwriters in the IPO (2001)
• AmerUs - in connection with its demutualization, the first demutualization of a mutual holding company (1999-2000)
• Standard Insurance - represented the financial advisor and underwriter in connection with Standard's demutualization (1998-1999)
• MONY - represented Goldman Sachs in connection with its investment in MONY and the underwriters in connection with MONY's demutualization (1997-1998)
• Financial advisor to Factory Mutuals ¿ in connection with a three-way merger (1998)
• Financial advisors - in connection with mutual holding company conversions, including Pacific Life, Principal Mutual and Western & Southern (1997-2000)
• AmerUs Life - represented the financial advisor/underwriter for American Mutual in connection with its conversion to mutual holding company and the subsequent policyholder subscription offering and initial public offering of common stock and capital securities of AmerUs Life (the stock successor to American Mutual) (1996-1997)
• Mutual company surplus note offerings - involved in more mutual company Rule 144A financing transactions than any other firm, including the first surplus note transactions in New York, Illinois, Ohio, Minnesota and Massachusetts. Representative transactions have included surplus note offerings by MetLife, The New England, New York Life, MONY, Mass Mutual, John Hancock, Lumbermens, Minnesota Mutual, Ohio National, Penn Mutual and Vermont Life (1993-2004)

Reinsurance and Alternative Risk Transfer Mechanisms

S&C provides comprehensive advice with respect to risk transfer mechanisms, including traditional and non-traditional reinsurance, captives, insurance securitizations and insurance derivatives. We follow the regulatory, GAAP and SAP accounting and tax rules applicable to these transactions, as well as their relative utility compared to traditional capital market transactions.

• In connection with insurance securitization, S&C took the lead and sought and obtained rulings from insurance regulators throughout the United States concerning the status of such securities for insurance regulatory purposes.
• We frequently advise as to issues regarding captives, including the Vermont, Arizona and New York statutory requirements, as well as TRIA issues.

Recent notable insurance securitization transactions include representation of:

• Allianz and Blue Wings Ltd. in connection with securitization of North American and earthquake risk and U.K. river flood risk (2007)
• AXA and Osiris Capital in connection with securitization of life insurance mortality risk (2006)
• AXA and Aura Re in connection with multi-year securitization of European natural catastrophe risk (2005)
• Initial purchasers of Stingray Pass-Through Trust - Rule 144A offering of trust certificates providing a source of liquidity for a subsidiary of Scottish Re Group Limited (2005)
• Bear Stearns in connection with an offering of mortgage insurance-linked notes securitizing primary mortgage insurance written by Radian Group Inc. in respect of a pool of residential mortgage loans (2004)
• UBS in connection with life/annuity securitizations (2003-2004)
• Initial purchasers of notes issued by Mony Holdings LLC in connection with Mony's securitization of its closed block (2002)

Offshore Insurers/Reinsurers

For decades, Sullivan & Cromwell has had significant experience in offshore insurance matters, where our work includes initial company formations and subsequent IPOs, equity investments, acquisitions and dispositions, and redomestications of offshore companies.

Historical representations include:

• Paris Re Holdings - in connection with IPO on EURONEXT, and pre-IPO restructuring and redomestication (2007)
• AIG as a founder and principal shareholder - initial public offering of Allied World Assurance (2006)
• IPC - in sale by AIG of its ownership interest (2006)
• IPC - in post-Katrina public offerings (2005)
• Catlin underwriters - initial public offering and London listing (Rule 144A) (2004)
• American Capital Access - redomestication to Bermuda (2002)
• Platinum Underwriters Holdings, Ltd. - initial public offering (2002)
• Platinum and St. Paul - in connection with Platinum's formation (2002)
• AIG and other Founders (Goldman Sachs and Chubb) - establishment of Allied World Assurance (2001)
• IPC - in post-9/11 public offerings (2001)
• SCOR - establishment of Irish Reinsurance Partners (2001)
• PMI - establishment of RAM Reinsurance (1998)
• Swiss Re - sale of SAFR to PartnerRe (1997)
• AIG - International Property Catastrophe Reinsurance Company's ("IPC") unsolicited proposal to acquire Tempest Re (1996)
• IPC (and its sponsor, AIG) - formation in 1993 and its initial public offering in 1996 (1993-1996)
• Global Capital Reinsurance, Ltd. (and its sponsors Johnson & Higgins and Goldman Sachs) - formation in 1993 and its initial public offering in 1995 (1993-1996)
• Commercial Risk and its shareholders (SCOR) - equity investment by Western General (1994)
• Starr Excess Liability Insurance Ltd. (and its sponsor AIG) - in connection with Starr's formation (1993)
• XL underwriters - initial public offerings (1991-1992)

Insurance Litigation

S&C's Litigation Group has represented insurance companies and, in certain cases, policyholders in complex litigations throughout the United States.

• CSR Limited - representation in asbestos coverage disputes, including insurance coverage and antitrust litigation against more than 60 insurers in the United States District Court for the District of New Jersey
• Exxon Corp. - representation in dispute with respect to insurance coverage for Valdez oil spill
• Generali - defense with respect to regulatory and litigation issues arising from the Bennett Funding collapse
• National Union Fire Insurance Co. - representation in political risk insurance litigation involving the Republic of the Congo and others
• Oxford Health Plans Inc. - in federal and state derivative litigation following decline in stock price
• T&N plc - representation in action resulting in summary judgment providing T&N with asbestos litigation coverage under lost insurance policies of a long-dissolved subsidiary. Also represented T&N in litigation concerning Pennsylvania Insurance Guaranty Association's liability for settlement of asbestos coverage issues with insolvent issuer
• United Healthcare - defense with respect to a shareholder class action alleging violation of Section 10(b) of the Securities Exchange Act
• UnumProvident - in defense of pending securities class actions

Internal and Regulatory Investigations

Sullivan & Cromwell represents insurers in a range of internal and regulatory investigations involving their insurance, securities, investment management, broker-dealer and other regulated businesses. Our representations have included advocacy before the SEC, the DOJ, the FTC, insurance regulators, banking regulators (including the Federal Reserve Board), the CFTC, local District Attorneys, the New York State and other state Attorneys General and U.S. Congressional Committees. We provide pre-crisis legal advice and training and legal and crisis management advice throughout the course of a regulatory investigation, including to Boards of Directors and Special Board Committees. At the inception of an engagement, we create an S&C team comprised of partners with relevant expertise, which frequently includes partners who are former federal or state prosecutors.

Ongoing or recent representations of clients that have been publicly announced include:

• With respect to insurance businesses: one of the major brokers with respect to the N.Y. Attorney General's investigation of contingent compensation arrangements; a number of insurers with respect to finite reinsurance; a leading disability insurer in connection with the N.Y. Attorney General's investigation of its practices; four major insurers in connection with (separate and unrelated) SEC/DOJ investigations, including under the FCPA; a large foreign insurer in the regulatory investigations and bankruptcy litigation arising from the financial fraud of Bennett Funding; a large health insurer in multiple government investigations following a decline in its stock price.
• With respect to investment management businesses: a number of investment company clients and/or their managers and/or Boards of Directors in regulatory investigations arising out of late trading/market timing investigations.
• With respect to broker-dealers: a number of such clients in connection with investigations arising out of the bankruptcy of Orange County investment pools; the SEC investigation involving Denver Airport bonds; investigations of competition issues regarding the NASDAQ stock market; investigations involving IPO allocations and investment research.
• With respect to banking businesses: a federal prosecution relating to the treatment of abandoned property; a number of federal investigations of money laundering and suspicious activity reporting; a grand jury investigation by the U.S. Attorney for S.D.N.Y. and criminal authorities in the U.K. and Russia into payment system transactions; a fraud investigation arising from US$ 1.1 billion in losses concealed by a trader; investigations of off-market trading by FOREX traders; investigation in trading of U.S. currency.
• Notable representations in other businesses include: representing Microsoft before the DOJ and other governmental authorities for the last decade; the Arthur Andersen partner who led the Enron audit team; a rating agency in a civil antitrust probe; witnesses in Congressional and DOJ investigations into campaign financing, access to FBI files and the White House Travel Office firings.

Tax

Tax lawyers at S&C have broad experience with the insurance industry (including life and non-life companies, both stock and mutual), have participated in all aspects of the Firm's insurance practice (including M&A and capital markets transactions, acquisitions and dispositions through mergers, stock purchases and assumption-reinsurance transactions; and demutualizations and other IPOs, including establishing and taking public offshore insurance companies) and have taken a leading role in designing novel financial products and financing structures for the insurance industry (including closed block financing and tracking stock; structures for risk securitization and premium financing; reinsurance, insurance derivatives and other structures for alternative risk transfer; separate account structures; and hybrid securities and surplus notes offerings).

• Our Tax Group deals regularly with cross-border issues affecting both domestic and foreign companies, advising companies on the domestic taxation of their international operations and non-U.S. companies on the U.S. taxation of their on-shore and off-shore U.S. operations.
• S&C (both its Tax and Litigation Groups) also represents insurers in disputes with the Internal Revenue Service, including matters involving competent authority proceedings; the treatment of failed contracts; the reasonableness of IBNR reserves; the allocation of expenses to U.S. branches of foreign insurers; and fresh start, reserve strengthening and the discounting of loss reserves.