We typically provide indicative terms of insurance within 48 hours from receipt of the request for terms, but we can provide a quote within 24 hours in exceptional circumstances.

See Process for more information.

Once appointed to underwrite, we can typically issue a finalised policy within five business days. Our Team has underwritten thousands of transactions and we can give an indicative timetable with milestones so that you can plan a route to signing.

In exceptional circumstances and depending on the nature of the target it may be possible to truncate this process.

Our objective is to make the process as straightforward and streamlined as possible for both the broker and the policyholder, to provide as wide a coverage position as possible, and to ensure there are no hold-ups.

See Process for more information.

It is prudent to consider whether insurance will be required early in an M&A transaction process (e.g. to ensure that appropriate due diligence and premium funds will be available) and it is easy to obtain a quote for W&I insurance. Insurance, including who will pay the premium, is often dealt with in the heads of terms.

Once an insurance provider is selected, it can be more efficient to wait until the transaction is reasonably well-progressed (i.e. due diligence is available and the SPA warranties are reasonably settled) before the underwriting process fully commences.

If a Seller is using W&I insurance to cap its liability then a stapled process may be appropriate (see seller FAQs).

Under a buy-side W&I policy, the buyer can proceed directly against the insurer without needing to first having a claim against the seller. Underwriting involves review of the due diligence reports and a short Q&A process with the buyer and its due diligence team in order to understand the target business.

With a sell-side W&I policy, the buyer will claim against the seller who will in turn recover from the insurance (the buyer may not be aware the W&I policy exists). From a process perspective, on a sell-side deal Brockwell will run a Q&A process with the seller and management in order to gain an insight into the business based on their knowledge and will review the data room (vendor due diligence is helpful, but not essential).

W&I insurance can in theory be used to cover contractual protections between any buyer and seller. These contractual protections may either have been agreed between parties or could be synthetic (i.e. within the policy only).

Other than in relation to a private share purchase, W&I can be used to protect against unknown risks arising from asset purchases or changes in JV partners or changes in investors at fund level by standing behind the warranties in a sale agreement.

Equally, where a fund is to be wound-up a W&I policy can be used to cover any outstanding liabilities under historic sale agreements. This allows for proceeds to be returned to investors faster and involves a sell-side underwriting process with the asset manager and their advisers.

Alternatively, it is possible for Brockwell to provide synthetic cover and we have developed a specific product for Distressed M&A using this concept. In short, we propose a standard short-form set of warranties and undertake a Q&A process in order to get comfortable with standing behind those contractual protections. The process is designed to accommodate limited due diligence and restricted seller involvement, whilst providing a buyer with additional comfort. We can provide our proposed warranty pack when we quote.

Synthetic cover may also be used in a public-to-private scenario, e.g. where the transaction is highly confidential and so limited information is available

The cost of W&I insurance will typically comprise the premium, applicable premium taxes, an underwriting fee, and broker commission.

A single, up-front premium is payable. Our minimum premium is typically £70,000 (or equivalent). The applicable insurance premium tax will depend on the location of the policyholder. However, we consider each transaction on its own merits and exceptionally we can offer a lower premium.

Our external expenses vary according to the complexity/size of the risk and the scope of work required. Typically, our external expenses are £10,000 – £20,000 (or equivalent).

The structure of your insurance broker’s commission will depend on the agreement they have with you. Typically, brokerage is a percentage of the premium (and we will provide a gross premium quote, i.e. inclusive of brokerage), but some brokers work to a fixed fee with their clients.

Typically the policyholder pays the premium, but this can be subject to commercial negotiation between relevant parties. For example, in order to obtain a clean exit a seller may contribute toward a buyer’s W&I insurance policy.

A W&I policy will typically include a de minimis threshold and an excess (which acts like an SPA basket).

We can consider enhancing the SPA de minimis where the external due diligence consistently reports (and identifies risks) to a lower level, but generally we do not offer a de minimis below 0.05% of transaction enterprise value. It may be possible to reduce the de minimis to a minimum of £10,000 (or equivalent) in certain exceptional cases, e.g. real estate transactions.

We can offer a fixed or tipping excess (e.g. where a certain threshold is met then the excess is waived) and we can consider providing an excess that is significantly lower than the SPA basket. We can offer a nil excess for real estate / renewables transactions.

Where, for example, limited information is available or a transaction is not ‘vanilla’ (e.g. Distressed M&A) the financial thresholds will be higher than we typically offer.

We can offer:

• three years for non-tax / non-fundamental warranties
• seven years for the fundamental / title & capacity warranties
• seven years for the tax warranties / covenant

Geographically, our primary markets are the United Kingdom, the Nordics, South Africa, and Australasia, but we also regularly insure risks in Northern Europe, CEE, the Baltics, and Asia. We are also insuring an increasing number of deal in Africa and the Middle East. We do not underwrite pure USA market deals, although we will underwrite a target business that has operations in the USA.

Aside from banks and insurance companies, which are outside of appetite, we have no sector specific restrictions on our appetite and have insured transactions in a wide range of sectors.

We do typically require the parties to appoint external professional advisors, and (if Buy-side insurance is required) for there to be external written legal, financial and tax due diligence reports for review.

We require the target to have audited accounts, unless it is a propco SPV or the target could not reasonably have been audited (e.g. it is a start-up).

Please refer to our Risk Appetite for further details.

A market standard tax covenant will typically be covered, but specific indemnities or covenants (e.g. in respect of a known risk or liability identified in due diligence) will not be covered by W&I insurance. However, low risk items can sometimes be underwritten and covered affirmatively in the policy (see enhancements for buyer-side W&I).

Alternatively, we will flag if it might be possible to insure an identified risk on a standalone basis with a Tax or Contingent policy. This requires a separate underwriting process and we would provide separate terms indicating cost and timing implications.

We do not currently offer insurance either to USA insured persons or in respect of purely USA transactions.

Beazley will be primarily responsible for claims handling. They are a highly regarded insurer and have an award-winning claims team that has dedicated claims handlers for transactional insurance risk. Beazley specialise in dealing with complex, multi-jurisdictional matters.

The senior underwriter assigned to your transaction will assist with each step of the claims process.

See Claims for more information.