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W&I Insurance

Brokers & Advisors

We want to help your clients get their deal done.

We understand that you and your clients need an insurance partner to facilitate the transaction and that takes reasoned, considered coverage positions – as an experienced group of M&A professionals our Team is able to meet challenging timelines and will proactively discuss coverage in order to offer the best position possible.

Each adviser recommending Brockwell places their trust in us to execute efficiently and consider their client’s commercial needs. Our Team are experts in providing W&I insurance, bringing together some of the most experienced practitioners in the W&I industry, meaning we can offer a premium service that will keep your clients happy during and after the transaction

Given our lengthy W&I experience, we are familiar with Claims and our process is capable of dealing with complex matters as efficiently as possible and is supported by robust Risk Capital from credible insurance companies.

For more information about Brockwell and our appetite see About Us and Risk Appetite.

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How can W&I insurance help me?

M&A advisers are now very familiar with using W&I insurance in order to protect their clients and put them in the best position possible. As W&I is so prevalent on transactions it is important for advisers to understand how to get the most from the cover and our experienced underwriters would be happy to provide guidance.

W&I insurance can be used to mitigate risk for your clients and/or facilitate an M&A transaction. For example, a W&I policy can help by:

  • facilitating a seller’s clean exit (e.g. capping liability at £1 can enhance an auction bid)
  • providing a greater limit of liability than a seller is willing / able to offer
  • protecting a financial model against unforeseen liabilities
  • increasing covenant strength and managing recoverability risk (see our [Risk Capital])
  • providing an alternative avenue of recourse (e.g. a private equity sponsor may not wish to sue its management team)

Transactional risk can arise outside of a share sale and our Team of expert M&A underwriters are able to cover contractual protections outside of typical private M&A share sales. For example, we are experienced in covering asset deals, as well as in Distressed M&A scenarios, and we often offer standalone Tax cover to protect the tax treatment of transactions.

Contact Us for more information.

What W&I policy enhancements can Brockwell offer?

We use our experience to give clients the best cover possible and may be able to offer the following enhancements in order to help your client mitigate risk:

  • new breach – cover for warranty breaches in the signing/closing gap
  • knowledge/materiality scrape – removal of warranty qualifiers
  • synthetic tax covenant – a tax covenant under the policy
  • affirmative cover – removal of disclosure under the policy in relation to certain identified risks
  • synthetic non-disclosure of the data room

Please see the FAQs below for further details.

We want to facilitate your transactions – if you have any specific coverage requests please let us know and we will consider whether we can accommodate these or create a bespoke solution. For example, ‘new breach’ cover was developed by Brockwell underwriters and is now offered more widely in the W&I insurance market.

Identified risks can cause a transaction to stall. It may be possible for us to provide a way forwards by completing a separate underwriting workstream to get comfortable, in which case our in-house experts will offer separate protection under a standalone Tax or Contingent policy. These products are often used to prevent the need for an indemnity / escrow or to protect a private equity sponsor’s investment model.

FAQs

W&I policies do not insure future events and so where there is a gap between signing and completion with warranties repeated at both dates a bring down of disclosure is required at completion. At bring down of disclosure any newly identified matters will be disclosed and so excluded from cover by the warranties given on the completion date.

New breach cover is a policy enhancement, developed by Brockwell’s underwriters, where the W&I insurance protects against the risk of warranty breaches arising between signing and completion.

This policy enhancement is available on a case-by-case basis for an additional premium. Typically we will offer this for deals where the gap between signing and completion is expected to be no more than two months.

Where the warranties given by a seller are all given subject to the awareness of the seller, this awareness qualifier can for an additional premium be disregarded (or ‘scraped’) for the purposes of the W&I policy.

The W&I policy would still implement an awareness qualification to specific warranties where such qualification would be in-line with market practice (such as forward-looking warranties or third party breaches).

A synthetic tax covenant (or ‘phantom tax covenant’) contained in a W&I policy is a tax covenant that is given by the insurer as an indemnity within a buy-side W&I policy instead of by the seller.

This is available for an additional premium and operates in the same manner as a conventional tax covenant. It is often used as a way to limit the costs of negotiating a tax deed/covenant between transaction parties.

Where a matter is noted or disclosed in due diligence, but is theoretical in that it does not relate to a substantive identified risk or known liability and is classified as a low, very low or remote risk, then notwithstanding the reference in the due diligence (for an additional premium) we may be able to undertake further underwriting and offer cover for such identified matter.

We are only able to offer affirmative cover where the risk noted in the due diligence is straightforward, the financial exposure is sufficiently low, and there is sufficient due diligence (or further information available) to allow us to underwrite the risk.

Tax insurance provides an indemnity to the policyholder for an identified tax risk. We regularly cover international risks between £1m and £45m.

For more information click here.

This insurance provides protection against uncertain legal interpretation. The policy includes an indemnity for an identified risk and can be used in both a contentious and non-contentious context.

For more information click here.

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