Highlights
- Financial capacity of up to US$70 million per TRI policy
- Primary or excess
Best For
- Companies involved in a mergers and acquisitions transaction
- Category: Transaction Risk
- Group: International Group
Mergers and acquisitions between companies come with a great deal of risk to both the purchasing and selling organizations. Representations & Warranties (W&I) insurance provides significant advantages to both parties to safeguard against a loss from breach of warranty or a misrepresentation on behalf of the seller or to provide a strategic tool for buyers to gain a competitive edge against other bidders.
Summary of Coverage
Representations and Warranties, also known as Warranty & Indemnity (W&I), insurance programs facilitate the sale and purchase process. Both buyer-side and seller-side policies are available, and the policy is structured to meet the risk retention and recourse requirements of the deal parties.
Representations and Warranties insurance provides a convenient solution to both buyers and sellers, and presents significant advantages, such as:
- A commercially viable alternative to security traditionally sought through costlier and less satisfactory means (such as an escrow account, bank guarantee or letter of credit)
- A simpler and more effective method of seeking indemnity against a loss resulting from a breach of warranty or tax deed / covenant in a sale and purchase agreement
- A tool to mitigate the vendor's risk for liabilities arising from innocent misrepresentations made by the vendor
- Coverage, afforded to the buyer, for any financial loss as a result of any misrepresentations (innocent or otherwise) made by the vendor
- A strategic tool to give the buyer a competitive edge against other bidders for the purchase or to make the vendor's offer more appealing, as the risk is transferred to a financially sound insurer
