Transactional Liability

Transactional Liability Insurance is financial loss suffered by a buyer for a breach of the seller’s representations and warranties.

What client types would need Transaction Liability Insurance?

Private Equity backed, acquisitive domestically and/or cross border, selling off non-core divisions.

What are the benefits to the client?

  • To allow a private equity seller a clean exit from the target business
  • To allow the sellers to unlock a greater proportion of their sale proceeds
  • To minimize the need to place any funds into escrow
  • To break a deadlock in deal negotiations
  • To enable a buyer to either satisfy its lenders or own internal mandate
  • To provide the buyer with a strategic advantage in the context of an auction process

What are the policy terms?

  • Policy period: 2-3 years general warranties, up to 7 years for tax
  • Deductible: Common deductible rates are 1-3% of the transaction value (US) nil to 1% for Europe
  • Premium: rates continue to be competitive

What information do we need?

  • Draft transaction agreement
  • Latest financial statements
  • Name of buyer, seller, target, transaction value, brief description of target activities and target geography

How long does it take?

We can typically place policies within 10 days of the first enquiry.

Markets

We have access to all markets both in the UK – Lloyd’s, MGA’s and Company Markets, European Markets – and in the USA, with Lloyd’s US for US-domiciled risks, MGA’s and US domestic markets.

Our Capabilities

As a broker our role is predominantly to access markets on behalf of clients, who in most cases are the Buyers of a company or asset. We act in an advisory capacity in respect of the deal structure and also as the placing agent. We work closely with all parties involved in the transaction to ensure the right market matches the covered warranties for the insurance buyer. We facilitate the many underwriting calls and processes that are involved in the underwriting process and we act as the conduit for the legal process in coverage determination.

Key People

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