Your Bank Is Buying Another Bank…

I got a call today from the CFO of a client bank.  They are 80% of the way to buying a small bank.  Relatively speaking, the bank they are buying is very, very small.

It’s so small that, in all likelihood, the acquisition will have no impact on my client’s fraud-bond or management liability insurance policies.  I told the CFO to give their insurer about a month’s notice of the purchase (unless there has been claims activity by the small bank – lender liability claims for example).

The selling bank does have significant issues to deal with.  I suggested my CFO client have the small bank contact their insurer now and start negotiating for longer reporting periods beyond the standard twelve month mandated term in the management liability policy.  There may be an opportunity to get other insurers involved too – perhaps competitive proposals.

The issue for the selling bank is the claims-made nature of the management liability policy. Go here for some of my writings on the topic of claims-made policies.