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.