Transactional Risks

Warranty & Indemnity Insurance (W&I)

• A mechanism for transferring risk by stepping into sellers’ shoes and protecting against loss suffered as a result of a breach of warranty.
• Covers loss or liability arising from unknown or undisclosed matters only.
• Can be purchased by either a buyer or a seller.

Buy-side

• Covers the buyer against the seller’s misrepresentations (both innocent and fraudulent).
• Two key advantages over a seller-side policy:
• The insured can claim directly against the insurer (i.e. without having to pursue recourse against the seller or warrantor(s)); and
• Provides indemnification in respect of the seller’s fraud.

Sell-side

• Offers liability protection to the seller for innocent misrepresentations in M&A transaction documents.
• Designed to respond in the event that the buyer brings a claim for a breach of warranty or a claim under the tax indemnity against the seller.
• Enables a seller to ring-fence the risks associated with the disposal.

Tax Liability Insurance

• Transfers a known or uncertain tax liability from the insured’s balance sheet to an insurer.
• Provides a quicker and confidential alternative to a tax authority clearance.
• The insurer will indemnify the insured for financial loss arising from a challenge from a tax authority.
• Available both pre or post M&A transaction (or on a standalone basis).

Contingent Legal Risks Insurance

• Covers identified or known contingent risks which are typically the subject of a specific indemnity in an M&A transaction.
• May also be provided for identified “one-off” issues which are not necessarily related to an acquisition or a disposal.