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M&A Insurance
Financial Lines

Until recently, parties involved in a merger or acquisition faced the prospect of money being tied up in escrow and long periods of uncertainty until the warranty periods had expired. Fortunately, there are now more options available to both the vendor and the purchaser. Chubb, with its excellent reputation for claims handling and financial strength, offers solutions specifically designed to work with M&A transactions.

Chubb’s policies provide cover for breaches of warranty in the Sale and Purchase Agreement and for obligations arising under indemnities or covenants in the Tax Deed or Sale and Purchase Agreement.

The two main types of policy are:

  • Sellers policies offering liability protection to the vendor (and the guarantor, if applicable)
  • Buyers policies offering a first party protection to the purchaser

Key benefits of Chubb’s W&I policies for sellers:

  • Protection for the vendor against liability for breach of a warranty or arising under an indemnity or covenant.
  • Cover for the costs of defending against a claim.
  • The ability to resolve an impasse between the seller and buyer over the value or content of the warranties given, since the warrantor may be more prepared to give warranties where insurance protection exists.
  • The confidence and ability to spend sale proceeds or distribute them to investors and lenders.
  • Chubb’s experience in handling claims means it can defend you and manage the settlement process should a loss occur, no matter how complex the claim.
  • The policy can also cover guarantors of the warranties and tax indemnities or covenants.

Key benefits of Chubb’s W&I policies for buyers:

  • The ability to recover a loss caused by a breach of warranty, or by a fact triggering an indemnity, that cannot be recovered from the seller, because it is in excess of the vendor’s liability limits specified in the Sale and Purchase Agreement.
  • Financial security: Chubb’s financial strength means that its policy is likely to provide you with greater security than that which could be provided by the sellers.
  • Enforceability: payment by Chubb can be much more readily available than from a seller who has spent the sale proceeds or who is domiciled overseas.
  • The policy can help the buyer raise funds for the acquisition by giving its financiers the confidence to invest.
  • The policy will instill confidence when making an acquisition in another country.
  • The ability to resolve an impasse between vendor and purchaser over the value or content of the warranties given.
  • The value of warranties can be enhanced where insufficient value of warranties is obtainable from the seller.