Mergers & Acquisitions
Representations & Warranties Insurance
Transactional Risk – What Does R&W Insurance Protect Against And When Is It Used?
Representations & warranties (“R&W”) insurance protects a buyer or seller from financial losses resulting from inaccuracies in the R&Ws made by the seller or target company in connection with a merger acquisition, divestiture or other business transaction. As a general rule, R&W insurance is most effectively used in transactions involving companies or businesses with a purchase price between $25 million and $750 million.
Structuring R&W Difference – What Is The Difference Between Buyer-Side And Seller-Side Coverage?
Either the buyer or the seller can be insured under an R&W insurance policy. A buyer-side policy reimburses the buyer for losses resulting from an inaccuracy in the R&Ws made by the seller or the target company in the acquisition agreement.
Duration – How Long Does The Coverage Extend?
R&W insurance policy periods generally match the survival period for R&Ws set forth in the acquisition agreement. Additionally, on a buyer-side policy, we can extend coverage beyond the survival period for R&Ws that the buyer is receiving from the seller in the acquisition agreement.
Coverage Terms – In The Policy Tailored To The Applicable Transition?
Each R&W insurance policy is tailored to suit the unique needs of the client on a particular transaction. Our website (http://www.aig.com/Representations-and-Warranties_20_2138.html) provides our template buyer-side and seller-side policies.
Information provided by AIG.
Insurance is underwritten by the AIG Companies®, which are the domestic property and casualty insurance subsidiaries of American International Group, Inc. Certain coverage may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.
Please refer to the actual insurance policies for complete details of the coverage summarized above. Risks and claims scenarios detailed above are offered only as examples. Coverage depends on the actual facts of each case and each individual policy. Coverage may not be available in all jurisdictions and issuance is subject to underwriting review and approval.
Certain of the products and programs described above are in the development stage and are not yet finalized or approved for offer or sale. Pending final development and approval, such products and programs may involve various types of financial products, including, for example, loans, derivatives and insurance. Non-insurance products and services may be provided by independent third parties.