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Representations and Warranties Insurance

Inaccuracies in representations and warranties made by the seller or the target company in connection with a merger or acquisition can result in costly liabilities. Buyers can be left without the ability to recover losses arising from these inaccuracies from the seller.  Sellers can be forced to hand back a portion of the purchase price.

Representations and Warranties Insurance helps protect buyers and sellers from financial losses resulting from inaccuracies in representations and warranties made in connection with mergers, acquisitions, divestitures and other business transactions. Policies can be crafted to address both buyer-specific and seller-specific concerns. Typical insureds include private equity and venture capital firms, portfolio companies, bidders in auction situations, financially distressed companies selling assets, divisions or subsidiaries and individuals and families selling closely-held companies.

Features and Benefits Back To Top
  • Underwritten by AIG's Mergers & Acquisitions Insurance Group, a leading provider of transactional risk insurance solutions  
  • Tailored to transactions with values from $25 million to $1 billion
  • Coverage highly customized to each transaction
  • Policy period generally matches survival period of representations and warranties but can be extended for a longer period on buyer-side policies
  • Up to $50 million in limits for any one transaction; larger programs can be arranged on a case-by-case basis
  • Premiums range from 2-5% of the limit of liability purchased and deductibles are typically between 1-3% of transaction value
  • Buyers reimbursed for losses resulting from inaccuracies in representations and warranties made by the seller, enabling buyers to recover losses directly from the insurer without having to locate and pursue the seller and its assets
  • Seller-side policies respond to losses resulting from claims made by the buyer for an inaccuracy in representations and warranties made by the seller about the acquired company or business,  protecting the seller from having to return a portion of the purchase price
  • Available for the complete set of representations and warranties made by a seller concerning a target company or business industry, including representations and warranties concerning environmental and intellectual property matters
 
Marketing Materials Back To Top

Representations and Warranties Insurance
Brochure introducing AIG's Representations and Warranties Insurance and highlights the features and coverages it provide

Mergers and Acquisitions Transactional Risk Solutions
An overview of Mergers and Acquisitions Transactional Risk Solutions

Questions and Answers (.pdf)
Q&A for Representations and Warranties Insurance

Reasons Why Clients Purchase R&W Insurance (.pdf)
Overview listing reasons why clients purchase Representations and Warranties Insurance

Deal Summary - Distinguishing a Bid in the Auction Context (.pdf)
Review of a sample case where AIG's solution was distinguishing a bid in the auction context.

Deal Summary - Facilitating the Deal (.pdf)
Review of a sample case where AIG's solution was facilitating the deal

Deal Summary - Insuring an Indemnity (.pdf)
Review of a sample case where AIG's solution was insuring an indemnity

Deal Summary - Insurance Provides Additional Comfort (.pdf)
Review of a sample case where AIG's solution was providing additional comfort

Deal Summary - Reducing Escrow Amount (.pdf)
Review of a sample case where AIG's solution was reducing escrow amounts

Transactional Insurance: Helping You Manage Transactional Liability - Webcast   

Articles & Commentary Back To Top

Maximizing Shareholder Values with Transactional Insurance
An article written by Jennifer Richards, Senior Vice President of the Mergers & Acquisitions Group

Representations and Warranties: Gaining the Competitive Edge in an Auction (.pdf)
Article from the Houston Business Journal regarding Representations and Warranties

Escrow and Insurance Protections in Public Deals (.pdf)
Article from the New York Law Journal regarding Representations and Warranties

It’s a Sellers Market (.pdf)
Article from the New York Law Journal's M&A Section regarding Representations and Warranties

Insuring for Accuracy (.pdf)
Article from Legal Times discussing the importance of Representations and Warranties

Insurance Adds Fuel to Heated M&A Battle (.pdf) 
Article discussing how insurance is stimulating the M&A battle

Buyer Beware: Prohibitions Against Rescission in Case of Seller Misrepresentations Enforced (.pdf)
Article from Inside M&A discussing where Representations and Warranties Insurance comes into play
 
Deal Jitters? (.pdf)
Article from Inc. magazine discussing the role of Representations and Warranties Insurance

Merger Party’s Newest Invitees: The Insurers (.pdf)
Article from The Wall Street Journal discussing insurance trends

Shielding the Deal (.pdf)
Article from The Deal discussing Transaction Insurance

Representation and Warranty Insurance: A Better Way to Get Deals Done? (.pdf)
Article discussing Representations and Warranties Insurance and its viability

Warranty and Indemnity Insurance Comes of Age (.pdf)
Article from Norton Rose law firm discussing the current state of Warranty Indemnity Insurance

Is Going Skimpy Risky Business?  It Doesn't Have to Be (.pdf)
Article that touches on the benefits of Representations and Warranties Insurance

Applications and Forms Back To Top

Representations and Warranties New Business Application (.pdf)  
Application for new business to purchase Representations and Warranties Insurance

Representations and Warranties Buyer-Side Specimen Policy (.pdf)
Sample buyer-side policy for Representations and Warranties Insurance

Representations and Warranties Seller-Side Specimen Policy (.pdf)
Sample seller-side policy for Representations and Warranties Insurance

Document Request List (.pdf)
Document request list for the Representations and Warrantees application

Discussion Agenda (.pdf)
Discussion agenda for Representations and Warrantees listing topics for review

Claims Back To Top

The member companies of AIG have a claims team dedicated to Representations and Warranties Insurance.  These seasoned professionals specialize in litigation surrounding complex transactions and in processing customer claims in a professional and expedient manner.

To report or check the status of a claim please contact us:
Tel: (212) 458-1139
Fax: (866) 452-0138
e-mail: c-claim@aig.com
Mail: c-Claim for Financial Lines
AIG Domestic Claims, Inc.
175 Water Street, 9 Fl.
New York, NY 10038

Download a claim form for submission.

Search our Claims Archive

Contacts and Additional Information Back To Top

For further information about R&W Insurance, please email us at MAInsurance@aig.com or please contact a member of the M&A Insurance Group at (212) 458-2361

Educational Presentations:

In the event you would like members of the Mergers & Acquisitions Insurance Group to give an educational presentation on R&W Insurance to members of your group or firm, please contact us at MAInsurance@aig.com or (212) 458-2361.