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Transactions can be time critical and may leave you with unforeseen risks post completion. We are able to provide transaction insurance solutions to remove obstacles, which can delay or even block deals from being completed. Where negotiation between the buyer and seller is unable to resolve the differences, a warranty and indemnity insurance solution may break the deadlock.
Warranty and indemnity insurance can also be used to form part of a wider deal strategy. We can help you structure a Warranty and Indemnity insurance program to differentiate your bid when in competitive auctions to buy or sell investments.
Private equity firms have also used warranty and indemnity insurance when exiting investments assets from distressed vendors, where there is uncertainty over their ability to meet their warranty commitments.
Due diligence provides an understanding of the targets’ insurable and uninsurable hazard risks and enables the deal team to make informed decisions. Key aspects of the report typically include; the integrity of the insurance program with post completion recommendations, total cost of risk (premiums & self-insured retentions), opportunities for savings and efficiencies, claims analysis (current and historic liabilities), one-off insurance costs (run-off, retroactive cover, risk surveys, occupational health and safety), and allocation of risk within the Sale & Purchase Agreement (SPA).
Insurers have an established and growing appetite for the provision of transactional insurance products. The most significant of which is Warranty and Indemnity (W&I) insurance, where the vendor’s warranties within an SPA are insured. This helps facilitate a clean exit (i.e. the buyer can claim directly from the policy in their name) and can bridge any expectation or value gaps between the contracting parties.
Additionally, we place a wide range of M&A products with insurers, including tax liability (known issues); loss mitigation / litigation buyouts; escrow buy downs; opinion based contingent risks; loss portfolio transfers; environmental impairment and prospectus liability.
We design, place and service insurance programs for individual portfolio companies and offer risk management support. Taking a structured, planned approach across all areas, including managed by a single relationship manager to maximise value at a fund and portfolio level.
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