Insurance in M&A Transactions
29th October 2018
In the last 5 years, the insurance and corporate spheres have witnessed a rapid rise in the use of warranty and indemnity insurance for mergers and acquisitions, with it now being almost market standard to obtain a W&I policy in such deals.
As a natural consequence, other insurance-based products have developed alongside the W&I offering to provide other comforts for sellers and purchasers alike, most notably title insurance for shares and real estate warranties provided in share purchase agreements.
Whilst buyers or sellers will be arranging W&I Insurance for all of the warranties being provided by the seller in an M&A deal, this cover is generally capped at a nominal sum and covers the insured for a limited period. However, what happens if there is a catastrophic challenge in relation to the Fundamental Warranties pertaining to the title to the shares of the target or the real estate? Title to shares and real estate insurance offers buyers (and their lenders) protection to the full enterprise value of the deal for their ownership period, as well as allowing the seller to have a clean exit avoiding escrow and contingent liabilities.
Another positive of this cover is that it can include cover for not just the unknown risks, but also those risks that have been identified as part of the due diligence process. Common insured risks include missing share certificates, pre-emption rights, planning, zoning and permit breaches or challenges. This specific risk cover can then be underwritten accordingly and added to the policy.
The team at DUAL Asset Underwriting have been leading the way with this innovative insurance addition in the M&A world and have not only the most experience in the market at underwriting such deals, but also the largest capacity in the market.
Want to learn more?
The DUAL Asset Underwriting team can provide in-house training sessions to explain further.
To find out more, contact the Underwriter below:
+44 (0)20 7337 9875