Why buy
Warranty & Indemnity Insurance ?

Mergers and Acquisitions (M&A) continue to be a key strategy for corporations to drive growth and increase profitability of businesses domestically, cross-border and across various industry sectors.

Warranty & Indemnity (W&I) insurance enables deals through the transfer of potential specific risks relating to that M&A transaction, helping to both reduce uncertainty and to close deals more quickly.

This insurance can be either seller-side or buyer-side policy, with the following potential benefits:

Benefits for the seller

Enables a clean exit

Easing of deadlocks and facilitation of the sale

Immediate distribution of sales proceeds with a reduced need for escrows

A more attractive target

Potential for a higher valuation

Specialist liability coverage

Benefits for the buyer

Improved certainty of payment due to insurer's superior credit rating

Protects investment and supports lending for the transaction

Enhances the bid position and enables the transaction negotiations

Increases Board transaction comfort

Protects against future disputes involving target management

First party coverage

What is Warranty & Indemnity Insurance ?

W&I insurance is a solution designed to transfer risks associated with mergers and acquisitions (M&A) to Insurers.

This tailored product, whether held by the Buyer or Seller, provides financial cover to the Insured in the event of a breach of warranty, a claim under the tax covenant or a misrepresentation in the underlying acquisition agreement.

The buyer-side policy allows the Buyer to claim from the Insurer what they are contractually entitled to from the Seller under the acquisition agreement.

The policy can be used as a powerful deal tool to streamline negotiations between the parties.

It can allow the Seller to limit its liability, whilst also giving the buyer the protection it requires through a W&I insurance policy.

Protection features

The result is a policy tailored to the specific transaction and with the following coverage features:

Losses resulting from a breach of a seller warranty or a seller's obligations in a tax deed of covenant

Costs associated with defending claims

Extended duration of cover compared to the survival period in the Sale Agreement

Flexibility with de minimis and thresholds compared to the Sale Agreement

Fraud on the part of the seller (buyer-side policy only)

Product Protection Features

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How does Warranty & Indemnity Insurance work?

  • Online
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This process usually takes between 1 and 2 days.

1 Set Up Stage

The Seller or the Buyer and their Advisors set up the Project on our online SME M&A platform, with a view to purchasing W&I protection for their transaction.

2 Quote Pack Stage

The seller uploads its disclosure information and fills out the Digital Disclosure Form online.  The Buyer uploads its due diligence reports and SPA; and fills out the Digital Due Diligence Form online. Fusion delivers a Quote Pack offer to the Insured and its Advisor. 

3 Binder Pack Stage

The forms, SPA, disclosure information and due diligence reports are updated. Fusion provides a Binder Pack offer.

4 Signing and Completion Stage.

The Signed SPA is uploaded and the Signing NDA is executed online. The Fusion policy is issued. 

Transaction completion is confirmed and the Completion NCD is signed online. 

Contact

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