Zurich Financial Services Inc. recently launched a mergers and acquisitions unit to help companies deal with risks associated with M&A transactions. The unit's New York-based office is up and running, expansion of the unit's services into Europe is expected later this year and expansion into Asia is being contemplated. Mario Vitale, chief executive officer, Zurich Global Corporate in North America--who less than a year ago joined Zurich from broker Willis Group Holdings Ltd.--discussed the new unit with Industry Focus.

Q: What led Zurich to want to tap into the mergers and acquisitions market?

A: Mergers and acquisitions, which are increasingly becoming a bigger part of the way businesses are formed, were missing a piece of the puzzle in structuring insurance deals.

Over time, the private equity firms and the companies going through M&As went to the table with strategic partners, and those partners included everything from advisers, bankers, accounting firms and law firms that specialize in M&A. They even eventually brought to the table insurance brokers that would help advise them on the transactions, and in fact I started the unit at Willis that did exactly that.

There were no insurance companies that had an equal seat at that table and yet insurance companies were the ones taking the risk out of the transaction and transferring it over to their balance sheets.

Q: What are some new M&A-related risks that companies face today that perhaps they didn't five or 10 years ago?

A: The deals are a lot different. When a company is buying another company today, they are not only buying another organization, but they are buying one that's often so big it's hard to get your arms around the risks that those companies have.

Companies are so diversified today.... Both the breadth and scope of what the acquiring company has to do in the due diligence process is really a lot more extensive.

The speed by which we are being asked to close on these transactions is breathtaking in and of itself. The pressure on the combined organizations to perform and meet earning expectations almost immediately is immense. So, there is a lot more pressure on companies to make sure they are doing everything to meet those expectations, including taking risk out of the equation.

Q: What are your predictions for M&A-related activity this year?

A: Last year there was $4 trillion in M&A activity. What we've seen so far this year is that it's 40% above that level. While there's a lot of predictions that the bubble might burst in M&A, the truth is, it's still very big--large transactions and a high number of them.

The good part about the unit is that it has been set up to not only help in mergers; some might say if the market ever turns, the next stage of this would be paring down and divestitures. The unit would still be geared up to do the same thing on the other side of the coin and help the companies with their divestitures.

From our perspective, whatever happens with this economy and with this particular trend, Zurich is providing not only a real value-added (service), but in any economic condition.