Global corporate mergers and acquisitions (M&A) activity continued to increase towards the end of 2017, of which approximately one-third were cross-border deals. Private equity firms and companies use transaction liability insurance to manage the risk inherent in mergers and acquisitions. Most common among these types of insurance is representation and warranty (R&W) insurance, which covers the risk of a target company’s seller breaching representations and warranties in a purchase agreement. R&W insurance was first created decades ago but has become increasingly popular in the past few years, particularly among private equity firms, which use it to facilitate the purchase and sale of portfolio companies.
This article discusses the history of transactional liability insurance, reviews existing case law addressing coverage issues that can arise under transactional liability policies and offers strategies for policyholders with claims under these types of policies.
Read more: Transactional Liability Insurance - facilitating international corporate transactions and getting your claims paid