Perceptive Underwriting
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Summary

Our Transactional Risks team specialise in underwriting Transaction Liability Insurance with a specific focus on small and medium sized deals. We underwrite UK and European deals that are conducted in English and provide capacity of up to GBP10 million for any one risk.

With minimum premiums lower than the market norm our Transactional Risks team are able to provide access to the W&I market for a new group of transactions, increasing opportunity for purchasers and sellers, brokers, lawyers and other M&A stakeholders.

Product Overview

Warranty and Indemnity Insurance is a multi-year, single premium insurance policy which covers breaches in warranties and indemnities given by the Seller during the acquisition of a business or asset.

Warranty and Indemnity (W&I) Insurance can be purchased to protect either the Buyer or Seller and has been proven to help facilitate deal activity, by removing uncertainties and potential obstacles that can affect the price or, even, the completion of the transaction.

W&I insurance can be attractive for both the Buyer and the Seller. Sellers can protect themselves and prevent sale proceeds being tied up in escrow accounts. Buyers get comfort from knowing that their investment is protected even if the Seller is unable to pay a warranty claim.  Moreover, Buyers can often purchase cover that exceeds the level of indemnity that the Seller is prepared to grant.

 

The Policy

Every policy is bespoke to each transaction, covering losses arising from breaches of the warranty package set out in the sale and purchase agreement (SPA).

In line with the market, we offer a claims-made policy with the policy period expected to match the warranty periods set out in the SPA.

The following coverage clauses will usually be included within a W&I Insurance policy:

Buyer-side   Seller-side
Breach of the warranties set out in the SPA Breach of the warranty package set out in the SPA
Breach of the tax covenant set out in the SPA (or separate tax deed) Breach of the tax covenant set out in the SPA (or separate tax deed)
Coverage to match the liability time periods for bringing claims set out the in the SPA (up to a maximum period of 7 years)  Coverage to match the liability time periods for bringing claims set out the in the SPA (up to a maximum period of 7 years)
Certain elements of defence costs covered by the Policy                                              Certain elements of defence costs covered by the Policy

        

                     

                                 

 

 

 

 

 

 

 

Key facts

  • Cover offered for a diverse range of industry sectors
  • Limits up to GBP10 million any one risk
  • 'A' rated financial security
  • Policies available in the UK, Channel Islands, EEA and other offshore jurisdictions
  • Low minimum premiums

 

The Underwriting Process

Our Transactional Risks team have a simple underwriting process, which enables you to get indicative terms with minimal information:

1. Premium indication

We treat all deals with the highest level of confidentiality and always sign a non-disclosure agreement to ensure your confidence and security. We can generally provide you with a good indication of terms with six straightforward pieces of information.

2. Quotation

You will need to send us the following information;

  • Draft acquisition agreements
  • Any other relevant transaction documents
  • Annual accounts for the target company
  • An information memorandum or management presentation

3. Underwriting

In order to issue a bound policy, we move on to the underwriting stage.

We work to ensure the final policy is as closely aligned to the terms set out in our initial indication and to secure the appropriate level of cover for the warranties in the final acquisition agreement. As part of this process we undertake a risk analysis in conjuction with our legal counsel by reviewing;

  • The transaction documents
  • The data room
  • Due diligence reports
  • Other documentation relevant to the transaction

4. Binding

  • Once you have received your policy and you are happy with the terms, we will bind the policy when the transaction has been signed.
  • You will also need to sign a no claims declaration and send final form transaction documentation.
  • We will then ask you to pay the premium and any fees upon completion.





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We offer a full claims management service

 

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