Representations and Warranties Insurance


  • Representations and Warranties - Advisor Award
  • Executive Liability Forms and Application

Industry Insights

  • Deal in Review
  • Distinguishing a Bid in the Auction Context
  • An investment bank was conducting an auction of an IT staffing company owned by a financial sponsor and company management.

    Read more to learn how purchasing representations and warranties insurance helped seal this deal.
  • Deal in Review
  • Facilitating the Deal
  • A large publicly traded company was negotiating the acquisition of a privately held company within the same industry.

    Read more to learn how purchasing representations and warranties insurance helped seal this deal.
  • Deal in Review
  • Insuring an Indemnity
  • A publicly traded financial institution entered into an agreement to sell its commercial mortgage banking subsidiary to a competing mortgage bank for approximately $100 million.

    Read more to learn how purchasing representations and warranties insurance helped seal this deal.
  • Deal in Review
  • Insurance Providing Additional Comfort
  • A large, publicly traded company was negotiating the acquisition of a privately held marketing company within the same industry.

    Read more to learn how purchasing representations and warranties insurance helped seal this deal.
  • Deal in Review
  • Reducing Escrow Amount
  • A private equity firm was negotiating the sale of its portfolio company to a strategic buyer for approximately $130 million.

    Read more to learn how purchasing representations and warranties insurance helped seal this deal.

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 and sellers can be forced to hand back a portion of the purchase price.

Representations and warranties insurance helps protect both buyers and sellers involved in these transactions from financial loss in the event inaccuracies in representations and warranties are made. By purchasing representation and warranties insurance, buyers can distinguish a bid, sellers can reduce indemnity obligations and both parties can close deals with ease and confidence.

Features & Benefits

    • Highly customized coverage for transactions with values from $20 million to $1 billion

    • Ability to match the policy period to the survival period of the representations and warranties—extensions for a longer period on buyer-side policies available upon request

    • Ease of reimbursement for buyers to recover losses directly from the insurer without having to locate and pursue the seller and its assets

    • Protects sellers from having to return a portion of the purchase price in the event the buyer brings a claim 

    • Coverage for the complete set of representations and warranties made by a seller, including environmental and intellectual property matters

Coverage

    • Available limits of up to $50 million 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

    • Deductibles are typically between 1-3% of the transaction value 


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