REPRESENTATIONS AND WARRANTIES INSURANCE

What is representations and warranties insurance?

  • Representations and warranties insurance (RWI) protects buyers and sellers from unknown risks and liabilities in M&A deals. RWI protects the insured from unknown breaches of representations and warranties made by sellers in an acquisition agreement.

Why do buyers and sellers value representations and warranties insurance?

  • Increases cash that sellers receive at closing by reducing the amount set aside for an indemnity escrow
  • Increases certainty for sellers by limiting indemnification obligations to buyers
  • Helps buyers win the deal
  • Protects relationships with management and sellers
  • Provides credit protection for buyers and extended survival for protection
  • Bridges the gap on deals at impasse
  • Protects against unlikely liabilities

TAX LIABILITY INSURANCE

Tax liability insurance protects insureds against the risk that a transaction or tax structure fails to qualify under its intended tax treatment.

Common insured tax exposures include:

  • Tax-free reorganizations, mergers and spin-offs
  • Real estate transactions
  • S corporations
  • Partnership issues
  • Energy tax credits
  • Historic tax credits
  • Net operating losses

CONTINGENT AND OTHER TRANSACTIONAL INSURANCE

Euclid Transactional provides coverage for contingent liabilities and transaction-related liabilities, including:

  • Successor liability issues
  • Fraudulent conveyance issues
  • Other identified exposures